Can I temporarily use money from my fund without losing my OZ tax benefit?
Only equity investments from a QOF to a QOZB count as qualifying investments for purposes of the QOF's 90% asset test. Accordingly, making additional equity investment from your QOF to your QOZB may be a better option from a compliance standpoint. Alternatively, you could consider making a personal loan to your QOZB to provide some short-term liquidity without creating a non-qualifying asset for your QOF.
I do not see any reason why you could not do that. The transaction would likely be characterized as a capital contribution and not a loan, but that is still totally OK under the OZ rules, presuming you'll be using the funds for operating the QOZB.
Cash and Debt are not eligible investments for a QOF. The QOF must have 90% of its assets invested in qualified opportunity zones but debt interests don't qualify as a QOZ asset. You will need to look at the specifics of your QOF holdings and assets. You may determine that the penalties for being underinvested may be justified in keeping the QOZB afloat.
If it is your money as it is your private OZF, then the result would be a taxable event. If it is other people's money, I would not recommend doing this and you should consult your attorney prior to doing so. Also, if you have a fund set up, you likely have a CPA preparing the tax return, you should consult your CPA in full on this matter.
Less than 5% for 6 months is probably ok.
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