May a self directed IRA make secured and unsecured loans?
A note is an extension of credit from one or more individuals or entities (lender(s)) to another individual(s)or entity(ies)(borrowers). An IRA is able to extend credit to any party (including corporations) as long as the party is not considered a “disqualified person”. Such notes can be either secured or unsecured. If they are secured, it means that in the event the borrower defaults on the loan from the lender, the borrower agrees to supply the lender with the “collateral” or “security” in lieu of the principal balance of the loan.
