How a Self-Directed IRA for Private Lending Works

What Self-Directed IRA Investors Need to Know About Private IRA Lending

What is private IRA lending? Simple: it is what happens when you make a loan from within a Self-Directed IRA. Many people don’t realize that they can take on private IRA lending with their retirement accounts, but it can actually be a powerful way to invest and diversify one’s assets.

But making a loan is not a small deal. It can commit a lot of your assets to the success of one party. If you are not sure about what you are doing, it can be a risky way to invest. However, a well-placed loan can also mean diversifying one’s retirement assets beyond the stock market, which potentially means securing retirement returns even when there is a down market. Here are some of the basic facts about private IRA lending that you will need to know:

  • There are multiple IRA lending options. You are not limited to one type of loan. In fact, you can loan from an IRA for a number of reasons. For example, you can make loans for mortgages and trust deeds. You can make a loan for a car note. There may be many reasons people need loans, and with an IRA, you can engage in many of them.
  • Private IRA lending can benefit the borrowers too. These days, securing a loan for a business can be a process full of red tape and all sorts of headaches. With private IRA lending, someone trying to obtain a loan can cut through that red tape. That is not to say that there will not be any paperwork involved—a Self-Directed IRA administration firm can help with the administration side of things. But private IRA lending can be a powerful way to simplify everything for both parties.
  • You can set up your own terms. Using a private IRA loan means that you will be able to set up your own structure and repayment terms. As long as both you and the borrower agree and get it in writing, there is a wide range of possibilities here. You can negotiate the terms that you feel are best for your Self-Directed IRA and for your retirement nest egg. You also get to factor in issues like risk from your end when you create the terms.
  • You get to choose between unsecured and secured terms. You have the choice here. You do not have to use an unsecured loan if you do not want to. And since you are in the driver’s seat when it comes to what you lend, you will be free to select your own investments with as much scrutiny as you wish. While many people believe that private IRA lending is inherently risky, that is simply not the case. You can choose just how risky the loans are, and you get to determine the overall strategy of your retirement portfolio.
  • There are beneficial tax reasons for private IRA lending. Why invest within an IRA? Why not simply make a loan with personal funds? There are tax benefits when it comes to IRA lending, just as there are tax benefits from investing in other assets within a Self-Directed IRA. This allows you to maximize the returns you generate with a well-placed loan.

With private IRA lending, you have access to a unique type of asset. It does not rely on the stock market. It does not rely on real estate. Yet it can generate cash flow for your IRA. It is a powerful way to build retirement security, so long as you do your homework. For more information, visit our private IRA lending page.

Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at