Thanks for the responses.
We're not sure yet how the application would look if they applied. We would generally recommend (an organization ownership) that strictly from a liability standpoint, but we're not lawyers or CPAs and aren't really qualified to give that advice. I think those discussions are probably had informally with the Applicants with advice to discuss it with their attorney.
I did look at that section on Owner-occupied property, but didn't know if the transient (temporary?) status of BnB guests made it an owner occupied rental or not.
I also wasn't sure what the definition of "housing unit" is. Does a bedroom and bathroom make a housing unit, or is a kitchen also required?
I also relied somewhat on
3. Factors. In determining whether credit to finance an acquisition—such as securities, antiques, or art—is primarily for business or commercial purposes (as opposed to a consumer purpose), the following factors should be considered:
i. General. A. The relationship of the borrower's primary occupation to the acquisition. The more closely related, the more likely it is to be business purpose.
B. The degree to which the borrower will personally manage the acquisition. The more personal involvement there is, the more likely it is to be business purpose.
C. The ratio of income from the acquisition to the total income of the borrower. The higher the ratio, the more likely it is to be business purpose.
D. The size of the transaction. The larger the transaction, the more likely it is to be business purpose.
E. The borrower's statement of purpose for the loan.
A - One possible applicant is a catering manager, so in the hospitality industry already.
B - The Applicant would be managing the operations at the location
C - This was undetermined as I don't have the applicant income
D - The transaction is fairly large, but not too much.
Previous Thread
Index