At least you understand the issues of borrowing money, though that won’t stop lenders from soliciting you, as you can see.Lastly, partnerships between friends like this never seem to work out.

Is there any other reason I may want to give such short terms given that I am also the part owner of the firm borrowing?

In fact, I'm currently borrowing at 1%.

Fannie Mae's guidelines verbatim are as follows:Must be occupied by the borrower for some portion of the yearMust be suitable for year round occupancyBorrower must have exclusive control over the propertyMust not be rental property or a timeshare arrangement (this has the following disclaimer in the guidelines:  If the lender identifies rental income from the property, the loan is eligible for delivery as a second home as long as the income is not used for qualifying purposes, and all other requirements for second homes are met (including the occupancy requirement above).Cannot be subject to any agreements that give a management firm control over the OCCUPANCY of the propertyThis means that as long as you intend to occupy the property some portion of the year, you could absolutely rent it while you are not using it. 

Loan LimitsVA does not set a cap on how much you can borrow to finance your home.

Sometimes a sponsor starts to "borrow from Peter to pay Paul" and that can become a vicious circle of ponzi-like activity that cannot be overcome.

And the people who were able to get loans in the last several years had to go through a difficult process of proving to the bank that they could repay the loans so the borrowers were more financially stable then the average borrower of 2006 to 2010.  

As a borrower you want to know how a lender will handle the construction loan administration including draws, contingent fund releases etc.,  and you will get a better feel for this if you’re directly communicating as opposed to going through an intermediary.

Can you borrow money from friends and family to be a cash bidder? 

The loan is underwritten based on the property and the borrower credit profile.