Home Improvement?

Trying to make a determination on a loan to an entity- it is to construct a shed for business use- however it is on the guarantor's personal property, the dwelling is securing the loan. Getting hung up on whether this would qualify under as home improvement and 'improving the real property on which the dwelling is located' or because it is specifically being constructed for business use by the company should we look at this as mixed use and the improvements are going to a commercial portion of the property?

I'd say it's reportable based on the below.

4. Mixed-use property. A closed-end mortgage loan or an open-end line of credit to improve a multifamily dwelling used for residential and commercial purposes (for example, a building containing apartment units and retail space), or the real property on which such a dwelling is located, is a home improvement loan if the loan's proceeds are used either to improve the entire property (for example, to replace the heating system), or if the proceeds are used primarily to improve the residential portion of the property. An institution may use any reasonable standard to determine the primary use of the loan proceeds. An institution may select the standard to apply on a case-by-case basis. See comment 3(c)(10)-3.ii for guidance on loans to improve primarily the commercial portion of a dwelling other than a multifamily dwelling.

3(c)(10)-3. Examples - covered business- or commercial-purpose transactions. The following are examples of closed-end mortgage loans and open-end lines of credit that are not excluded from reporting under § 1003.3(c)(10) because, although they primarily are for a business or commercial purpose, they also meet the definition of a home improvement loan under § 1003.2(i), a home purchase loan under § 1003.2(j), or a refinancing under § 1003.2(p):

ii. A closed-end mortgage loan or an open-end line of credit to improve a doctor's office or a daycare center that is located in a dwelling other than a multifamily dwelling;

Thank you for responding. That's the conclusion I'm coming to as well as I'm continuing to look. Essentially the mixed-use test is only applicable when we've got multi-family as collateral. I found a handy short video from BCC that lays it out nicely that I'm going to forward to the staff that might help lay it out clearly also.

Thanks!