Which of the following would classify as a business-purpose loan?

Which of the following would classify as a business-purpose loan?

• A. A loan to purchase a family home
• B. A loan to buy 50 acres of undeveloped land for a shopping center
• C. A loan for personal expenses
• D. A loan to buy a car for personal use

Answer: (B)

A business-purpose loan is characterized by its intent to finance an activity primarily for business profit or investment rather than personal or household use. In this context, the correct answer pertains to a loan for purchasing 50 acres of undeveloped land intended for a shopping center. This scenario clearly aligns with business activities as it involves purchasing property for commercial development, targeting customer services, and generating income from that venture. In contrast, the other scenarios involve personal or household transactions, which do not meet the criteria of a business-purpose loan. A loan to purchase a family home is for personal residency, a loan for personal expenses could involve various non-business expenditures, and a loan to buy a car for personal use is specifically tied to individual transportation needs rather than business operations. Thus, only the situation involving the shopping center land aligns with the definition of a business-purpose loan.

A business-purpose loan is characterized by its intent to finance an activity primarily for business profit or investment rather than personal or household use. In this context, the correct answer pertains to a loan for purchasing 50 acres of undeveloped land intended for a shopping center. This scenario clearly aligns with business activities as it involves purchasing property for commercial development, targeting customer services, and generating income from that venture.

In contrast, the other scenarios involve personal or household transactions, which do not meet the criteria of a business-purpose loan. A loan to purchase a family home is for personal residency, a loan for personal expenses could involve various non-business expenditures, and a loan to buy a car for personal use is specifically tied to individual transportation needs rather than business operations. Thus, only the situation involving the shopping center land aligns with the definition of a business-purpose loan.