We have a customer that owns a gym. He is the only individual on the loan using the gym as collateral. The purpose of the loan is a refinance the business. Again the loan is made to the individual not the business. In trying to decide if an appraisal is necessary and if the loan is a business purpose loan which exempts an appraisal under 1 million dollar transaction?

Any suggestions. The business loan definition under 323.2 says a "business loan" is made to pretty much anyone except and individual so we are having a hard time determining if this is a true "business loan" under appraisal regs.

How does he own the gym? Jim Smith d/b/a Jim's Gym? If so, there's your sole proprietorship or other business entity.

I've always leaned more towards the repayment of the loan vs the name on the loan. For the business loan exemption, I think the intention is that the loan payments will be made by the cash flow of the business rather than relying on the income from the operation or sale of the real estate.