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, and no rules about what you spend it on. Nothing gets reported to the credit bureaus either, so your personal borrowing power stays open for whatever the business needs next.
What it doesn't do is make the money free. Loan interest builds up. The death benefit drops by whatever you still owe. And if the business eats the loan and the policy sits loaded for a decade, that interest compounds against cash value that's growing too. 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 real room between the loan balance and the cash value you can reach. A policy borrowed close to its limit has no cushion for the year the business needs a second round. 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 of the money going into the business, and of how you're treating it. A loan to the company, or money you put in as an owner. 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.