HUD 232 Loan Borrower Eligibility
In order to take out a HUD 232 or HUD 232/223(f) loan, a borrower must typically have experience successfully operating one or more facilities of the same kind that they intend to build or purchase. In addition, a borrower must also be structured as a single asset, special purpose entity (SPE). Eligible borrowers may either be a for-profit or a non-profit entity.
What is a Single Purpose Entity?
Special purpose entities, or SPEs, which themselves are usually limited liability companies (LLCs), or limited partnerships (LPs), are entities that are used by a larger company in order to isolate a specific asset, often real estate. This is done to reduce risk for the parent company, as most SPEs are considered “bankruptcy-remote” (i.e. if the parent company declares bankruptcy, the SPE is typically protected, and vice-versa).