Advice on 2 Lending Options

[Taylor Thompson]

First post here so looking for some insight from the experts. Working on a small MF construction project (2 6-unit townhomes). We have two competing bank offers and I'm looking for insights/advice for or against either one. The plan is to hold for 5 years then sell.

Loan amount for each is $2.2M

Option 1 (this term sheet was 11 pages long so let me know if anything important is missing to include): 

• The Loan Amount shall be limited to the lesser of (i) $2,221,000,
  (ii) 75.0% of the sum of the (a) Land Value (as hereinafter
  defined), (b) cost to construct the Townhomes, (c) amount needed
  to fund the Allocations (as hereinafter defined), and (d) amount
  needed to fund closing costs and related expenses ([a], [b], [c], and
  [d] are hereinafter collectively referred to as “Project Costs”), or
  (iii) 70.0% of the appraised value of the Property “as-stabilized”.

• The other 25% needs to be invested by us (we own land outright) + any other soft costs of the project and go towards that. 

• The Interest Rate on the Loan will float at the Wall Street Journal
  Prime Rate (“WSJP”) plus 150 basis points (“Spread”), subject
  to a floor rate of 4.75% (“Floor Rate”).

• 36 Month term. First 24 months (or until project complete) interest only. We have the option of extending the loan for 12-months or we can refinance with permanent financing after. There's also a $500 "management fee" due at each draw. 

Option 2: 

• The loan amount will be up to $2,221,000. With a maximum loan to value of 75%.

• Up to 18 months non revolving credit facility followed by term loan with an
  aggregate 84 month term. A maximum of 75 %LTV based on a current appraisal
  (Bank will order appraisal). Interest only during construction at 4.25% fixed followed
  by P&I paid monthly at 4.25% fixed with principal due at maturity.

• Term: 7 year term with a 20 year amortization.
  Interest Rate(s): Fixed interest rate at 4.25%
  Origination 50 basis points of the final loan amount.
  Prepayment Penalty: 5,4,3,2,1 declining prepayment penalty

Would appreciate any insight or advice from the experts out there. Thank you!