The natural reaction is to significantly cut your rate to attract business.

I'm not pitching them, just an alternative source of deals and sponsors.   

Are there other alternatives that may be better to consider like umbrella policy insurance? 

--but that's the nature of the game.

What are your thoughts on the requirement that only one licesne is issued for each natural person? 

Triply so since it's owner-occupied (which was a condition of the first time home buyer program, so even if you told a new lender that's not true, as a private lender I wouldn't touch that with a 100' pole).You're almost certainly going to have to find a way to pay for the home improvement out of pocket; your equity is completely tapped out and you'll need to investigate alternative ways to fund the improvements such as starting/expanding a side hustle, getting unsecured loans from family or friends if available, etc.

We worked together to buy my first investment property and he became my mentor naturally.

Fannie/Freddie only do loans to natural persons.I found commercial loans so fun with annual financial reporting, calls, adjustable rates, balloons, etc that I made it my primary goal to get rid of them last year. 

I am looking for an individual or small firm who is reasonably priced as the deals will not be complex in nature. 

Very simple really...The alternative simply is not acceptable!