What types of loans can be made by a self directed IRA?
• Unsecured Loan between an IRA and an Individual When an unsecured loan is between an IRA and an individual, it is only the reputation and creditworthiness of the borrower (individual) that the lender (IRA) is relying on for repayment. As a result, unsecured loans are much higher risk than secured loans and for this reason they are most common between family and friends. With IRAs, however, there are restrictions for certain intra-family transactions (click here for prohibited transactions). • Unsecured Loan between an IRA and an entity (LLC, C-Corp, etc.) Unsecured loans between an IRA (as the lender) and a corporation (as the borrower) are even rarer than personal loans, because an entity doesn’t have to stake its personal reputation on the line. However, such loans are more vulnerable to lawsuits in the event of default. In addition, care must be taken to avoid lending to a company that is owned 50% or more by “disqualified persons” (e.g. direct relatives and the spouse of the IRA
