I normally don't advise seeing an attorney for something this vanilla but based on your post, I can tell that your new to this and I would highly recommend you seek legal council before you make this loan.. as others have stated.. a Prom note alone is not security its only as good as the guy or gal signing it and if they need money from U usually means they have no real assets.. so if you had to collect you would probably lose most if not all your money.

In other words, no, you do not need to form any business entity and if you're going to wholesale, it is highly advisable that you do so as an individual and not flaunting the fact that you're in the business of acting as a RE broker/agent.If you have nothing, most won't go after you anyway, they just chalk it up as another newbie.....but don't abuse your advantage of youth and lack of knowledge. :)

For my mentors I like to send out birthday wishes, articles about prom things relevant to their area.

As long as they continue to flaunt their dislike of government interferace they will be targeted.

few items 1. treat them like you would a tenant.. full criminal back ground and credit check that you run.. if they wont submit to that then you have your answer.. once you get those and they look good that's first step2. depending on if your in an attorney or title and escrow state you can have Deed or mortgage recorded against the property and a prom note made out to you.3. make sure your not violating usury laws in the area.. if you are then you need a different type of arrangement.4. if there is a senior lender .. contact them let them know your going to be a junior lender and if they are going to have any problems letting you take over or communicating with you on loan balances. 

What you need is a simple JV Agreement or Prom Note. 

Im a  big fan in fact I would probably find other uses like drive high school kids to prom in it or charge for photo opps to the public .

2nd deed of trust.. or just an unsecured Prom note.. or a JV agreement all of those work.

think of all the seconds that got wiped out over the last few years.Just lend them the money personally on an unsecured Prom Note.. since its really going for business development then get a equity share with the business going forward your being more of a partner than a lender.. plus your not at all experienced at what your doing.

He was flaunting a deal that I underwrote and passed on a few weeks ago.