They clearly had no intention of paying off the loan in October but sought instead to further reduce their loan balance during a time of the note holder's personal hardship.

When I checked it out the fund he spoke of was making unsecured working capital loans to businesses with no credit.  

There is a big difference in how those are handled  HAHA I just saw a post and commented where the person wanted to ask if they should overpay for a home because they can get is seller financing.

A FHA 203k Loan is where the purchase price and rehab costs are rolled into a single loan.The downside of using FHA or a FHA 203k is you will need to live there, for a minimum of one year (to satisfy FHA Requirements); AND because you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC.

All that said, we just met them in the middle and gave them the credit because we wanted it to be over.

They always make sure to have line(s) of credit to get them through challenging periods.

I've sold over 80 homes personally in the last 30 months and I'm usually within $5k of the appraisal report when I run my CMA for clients.

Otherwise, if the numbers make sense and your credit is good, it should be easy to find a lender.

I would definitely check Dunn and Bradstreet for any open lines of credit, liens, judgements and the like. 

If you are looking at FHA because of credit score, then I would work on credit scores to qualify for conventional financing or see if you can get a very strong coborrower with high scores.