A new business can't get a bank loan. No revenue history, no collateral, and the SBA wants two years of returns you don't have. So founders end up on credit cards at 24% or taking money from family with terms nobody wrote down.
A funded policy skips the application entirely. You call the carrier, request the loan, and the money shows up in a few business days. No credit check, no business plan, no covenant about what you can spend it on, and nothing reported to the credit bureaus, which keeps your personal borrowing capacity intact for whatever the business needs next.
What it doesn't do is make the money free. Loan interest accrues, the death benefit is reduced by the outstanding balance, and if the business consumes the loan and the policy sits loaded for a decade, that interest compounds against cash value that's also growing. Whether it nets out depends on the loan rate against the policy's crediting rate, and that gap moves.
Size it against the policy, not against the plan. Leave meaningful room between the loan balance and the available cash value, because a policy borrowed close to its limit has no cushion for the year the business needs a second injection. I don't like taking the first loan at the maximum. It removes the option that made the tool useful in the first place.
Set your own repayment schedule and put it on autopay out of the business account. Nobody is going to bill you, and a policy loan with no schedule attached tends to sit for years. Treating it like a five-year note with a real monthly payment is what keeps the death benefit whole.
One structural note. The loan is personal, from your policy, even when the money funds a business. Keep clean records showing the transfer into the business and how it's characterized, whether as a loan to the entity or a capital contribution. That distinction matters for taxes and for what happens if the business fails, and it belongs with your CPA and your attorney rather than with me.