If I was to somehow turn my rental into a business, would I start qualifing for business loans etc. through the Sole Proprietorship or LLC?

It would be a different type of loan than the one you bought the house with in your own name. 

Most of them will not manage a rent-by-room situation, but you may get lucky.

That said my go to 'line' in situations like this is something to the effect of: "Thanks for clarifying that requirement for me, could you point me to the specific section or sections in the code that covers this?" 

My hope in bringing this to the forum is to see if I'm looking at the situation through a limited lens or if I'm seeing things clearly and just not wanting to let go.

I did a DSCR loan the other month at 8% and $2,300 in lender fees.

Once we start treating them like trespassers with immediate evictions, they'll stop taking advantage of the situation. 

Sounds like they took out loans with interest rates that can change.

My clients in Texas and Florida have been receiving interest rates below 6.5% on FHA loans, so it’s there to be had.

It depends on various factors, including your experience, market knowledge, financial situation, and the specifics of the property and location.