A foundation can provide a loan to a grantee—see our publication Leveraging Your Assets With Loans and Other Program Related Investments.
Your position on the board does constitute a conflict of interest—in that it may be difficult for you to be impartial in voting on whether to award the loan—but conflicts of interest can be easily managed by following the steps outlined in a conflict of interest policy. Conflicts of interest are ethical matters, not legal ones.
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