Loaning private money notes in a Solo 401k

[Olivia Dansereau]

If my solo 401k lends private/hard money to an investor, am I able to charge a percentage of the profits as well as interest? In my state the interest rate is capped at 12%. Also, what about up front fees? I can't seem to find regulation governing those amounts. 

I want to stash as much as possible into my 401k but don't want to get hit with UBIT taxes. 

I also have the option of buying a share of the business directly but was told this would trigger additional taxes whereas lending on a note would not. The investor and I have agreed to a 60/40 split  (I'm at 60%) so I'm trying to find the best way to structure this without triggering UBIT. 

[Don Konipol]

@Olivia Dansereau, you could form an entity to originate the note, have that entity charge an origination fee, and your solo 401K which holds the note charges interest.  this will 99% of the time pass muster, but a very aggressive attorney representing the borrower can challenge this setup as both entities having the same owners of beneficial interest.