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Learning Center


Access the largest knowledge base for Self-Directed IRAs. Expand your investor knowledge with articles, whitepapers, practical guides and tons of other educational resources.

About Entrust


For 40 years, The Entrust Group has provided account administration services for self-directed retirement and tax-advantaged plans. Entrust can assist you in purchasing alternative investments with your retirement funds, and administer the buying and selling of assets that are typically unavailable through banks and brokerage firms.

Private Lending

Private lending is an opportunity to invest in debt-based financial instruments, or loans. A loan investment made by a Self-Directed IRA (SDIRA) requires the creation of a promissory note. A promissory note is a written promise to repay debt under specified terms. These specific terms usually involve a declared timeline, series of payments, or funds due upon demand. They can also include an interest rate and written consequences that will occur if the borrower defaults.

One of the advantages of owning notes is a steady income stream. You can look forward to regular deposits into your Self-Directed IRA, where the income will grow tax-free (in a Roth IRA) or tax-deferred (in a Traditional IRA). The income received from a note is truly passive.

Types of Loans


Personal Loans

Personal loans can be used for virtually any purpose.
Some of the most common uses include debt consolidation, home improvements, medical bills, and tuition.
The lender takes on more risk with a personal loan since there is no collateral securing it.

Business Loans

Companies can use a business loan/promissory note as an alternative method of obtaining credit when they have exhausted other options. Promissory notes issued by a corporation typically carry a different level of risk due to the fact that the note is backed with corporate stock as the collateral.
Depending on the success of the company, the value of the collateral can increase or decrease.

Mortgage Notes

These are promissory notes that specify the amount of the mortgage loan and the borrower’s promise to repay it. These notes are secured by property. If the borrower defaults, the lender can foreclose on the property to satisfy the loan. A deed of trust or mortgage deed is created once the parties agree on the terms which the lender will hold onto until the loan is paid in full. There are two types of mortgage notes: performing and non-performing notes. If the borrower makes their payment on time, the note is performing, if they don’t, the note is non-performing.

Investors who want to invest in real estate without the hassle of owning a real estate property tend to appreciate the benefits of mortgage notes. Owning the note rather than the underlying property also leaves you with a much more liquid investment. You can sell the note to another investor with relative ease (and speed), whereas offloading real estate takes considerable time, planning, and effort.


Equipment and Automobile Financing

Your SDIRA can invest in a loan that provides financing for the borrower to purchase a new vehicle or equipment.
The vehicle/equipment becomes collateral and can be seized in the event of nonpayment.

The Difference Between Secured and Unsecured Notes

Secured Notes

Secured loans are backed by collateral. The borrower pledges certain assets which can be seized by the lender if the borrower defaults on the loan.

Unsecured Notes

Unsecured loans are not backed by collateral and are considered riskier than secured loans since there is no material recourse if the borrower defaults.

Convertible Notes

Notes that are convertible can be exchanged for equity assets by either the owner of the security or the entity responsible for issuing it. This transition is frequently made if an institutional investor purchases an equity interest in the financial entity that issued the note. These notes are considered a type of short-term debt financing and are often used by seed or angel investors looking to fund an early-stage startup.

Avoiding Prohibited Transactions

Your IRA cannot issue a loan to a disqualified person; the act of doing so is called a “prohibited transaction.” Your IRA is also unable to issue a loan that benefits a disqualified person, as this would result in a self-dealing prohibited transaction.



You loan your son $50,000 from your IRA.


You use IRA funds to issue a loan to a company at which your granddaughter is a shareholder.

Steps to Lend Money With an SDIRA

Open a Self-Directed IRA

Open an account online in under 10 minutes here.

Find your investment

Find an individual or entity interested in borrowing money from your account. Make sure you’ve done your due diligence on the borrower.

Initiate the note

a. For a private lending note: Complete an Alternative Asset Investment Request on the portal OR fill out a Private Lending Buy Direction Letter for Entrust to request the funds.

b. For mortgage notes: Complete a Real Estate Note Investment Request on the portal OR fill out the Real Estate Note Buy Direction Letter.

Entrust processes the transaction
  1. Entrust reviews your form and all documentation to make sure it’s compliant.
  2. Once forms and documents have been reviewed and accepted, Entrust sends funds to your borrower or title company (for mortgage notes only)
  3. The asset is now booked into your Entrust Account*.

*Note: For mortgage notes, please send the original Promissory Note and Recorded Deed of Trust/Mortgage to Entrust for recordkeeping.


Your SDIRA now holds your note!


If you are partnering your IRA with personal funds, both you and your IRA are the lenders. In this case, you need to add the percentages of an ownership interest to the title.

For example: The Entrust Group, Inc. FBO John Smith Account #12345, [Percentage of ownership] % undivided interest.

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