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Your spouse is your partner in everything. Whether its decisions about where you’ll live or what you’ll have for dinner tonight, you two make an excellent team. Naturally, many couples decide to take this special partnership into the business world by starting their own company.

Applying for a business loan with your spouse is somewhat different than applying as an individual or with another partner. Because you and your spouse are a financial unit, no matter how you’ve separated or combined your finances, it will impact your funding prospects.

When you apply for a business loan, lenders expect that anyone with more than a 20 percent stake in the company to apply. If you and your spouse are co-owners, you can both expect a lender to thoroughly comb your finances. If you’ll be co-signing a loan with your spouse, both of your personal credit histories will be crucial in determining the outcome of your loan application.

When lenders ask you to apply for a loan, they are looking for information that lets them know how easily you can repay the loan. If a married couple applies for a loan, the bank wants to know that the household unit is strong enough to start the business while repaying the loan. Even if the spouses keep their finances separate, the bank wants to see financial fitness from both partners, especially if both plan to quit their current jobs to launch the business. This can be a tough threshold to clear even for the most financially fit couples.

Finding funding for your family business

Funding is essential in the quest to achieve your dream of a family-owned business and there are several options to consider.

Some choose to apply for a government-backed loan, like the U.S. Small Business Association (SBA) 7a Loan Guarantee program. With a 7(a) loan-guarantee, lenders are more willing to provide small businesses with funding.

Another way to fund your business with your spouse is through rollovers as business startups (ROBS). With ROBS funding, you create a self-directed 401(k) plan using your personal retirement savings to fund your business. Using your retirement savings to fund your business is tax-deferred and penalty-free as well as IRS-approved. This means you aren’t securing a loan, and you’ll have more equity to start your business. Plus, a rollover doesn’t mandate a repayment schedule, any collateral, or down payment like most loans. With ROBS, you can combine your retirement assets with your spouse to invest in your business together.

If you and your spouse are building your dream business and need help securing funding, Tenet Financial can help. Contact our funding consultants today.