Private Lending Vs Business Loan!

[Rachelle Bisaillon]

I am exploring my options for private lending versus a business loan for a new construction deal and am trying to figure out the best way to go. Heres the deal:

I owe $242,000 on a piece of land
Tear down old house and build 2 townhomes valued at $600,000 each, total of $1.2 million
Cost to build is $150 sq ft, looking to build 3200 sq ft @$480,000

When finished I should be in for roughly $760,000 including my intial cost of the land. So I am looking at about $400,000 in equity.

*I prefer to hold and not sell when finished. Can I do a cash out in the end to pay off the business loan? What are the pros and cons of a business loan over a regular private money deal. What is the ideal way that these should be structured? What should I be looking out for? How do I know these lenders are legit ? 

Heres the current business loan structure presented: I can also do one year term but wondering if I will have enough time to build and refi it out when you never know if another covid crap hits and stalls us out. Thoughts?? Newbie! Ahhh

$ 500,000.00 Loan Amount
5% Interest Rate
24 Monthly Payments of $ 2,684.11
$ 486,889.20 Balloon Payment
$551,307 Total payment
$51,307 Interest paid
$10,000 Fee