Hard Money Lending as a business?

[Emma S.]

Hi, I'm fairly new to RE investing. After reading and learning so much on BP, I'm considering starting out with passive RE investments (HML and mortgage notes). I read the threads on becoming a HML. I'm thinking of setting up a "business" to be eligible to transfer my traditional IRA into a Self Directed 401(k). Then I want to be able to do annual contributions to the SD 401(k) from the proceeds of a HML business. I want to do mortgage notes within the 401(k). So here are my questions for the experts:

1) I'm assuming HML is considered a "business" activity not an "investment" activity, correct? If yes, can it be set up as a sole proprietorship?
2) Does it make sense to start off HML with limited funds (25k) by investing in a pool? I came across one pool that accepts investor funds starting at 25k.
3) What do you think of this site? http://www.privatemoneylendingguide.com/investors/index.php

I would really like to hear from HML's @ Ann Bellamy, @ Jeff S and also the tax guy @ Steve Hamilton and @ David Beard about setting up the solo 401k correctly.

Thanks so much to everyone for sharing your invaluable advice!