It is also my experience that small plans in small towns are more likely to breach their fiduciary responsibility and engage in a prohibitedtransaction.
Becoming a fiduciary is not prohibited but it does impose additional requirements and care to avoid conflicts of interest and self-dealing which can become the basis for a prohibitedtransaction.
It should be noted that this would likely be considered a prohibitedtransaction if the second loan was from another source besides an IRA, since the indirect benefit would still have come into play.
Indeed, the DOL has developed such an extensive body of regulatory law and practice regarding independent fiduciaries that it seems virtually any transaction or course of dealing that would be prohibited under the ERISA statute, a corporation can engage in under the watchful eye of an independent fiduciary.
And the Senate rejected a proposed amendment that would have prohibited lenders (credit card lenders included) from charging an interest rate on any credit transaction (except real estate) that exceeds the maximum interest rate allowed by state law.