I believe they are recouping costs associated with loans they don't close.

Has anyone have any experience acquiring multifamily property using a SBA loan like to get your thoughts?

I would take out a private loan on the paid off property to get the other one squared away

I recently seperated from active duty went guard and my partner who is active duty and I are trying to combine our VA entitlements as we did previously and co-signed on our previous loan.

You're probably better off getting a Hard Money Loan.

I was looking at DSCR loans because they don't require extensive checks like the bank loans and they "only" look at the income generated from the property to qualify for the loan.

We are trying to think of all our options for a rehab loan.

Different DSCR lenders have different guidelines.More on DSCR loans: DSCR loans won't use your income to underwrite the loan. 

And if you are not in a position to refi quickly or cash out the loan then you too take on a risk.. thats it thats the whole enchilada when it comes to sub 2.

Maybe consider a conventional reno loan like the Homestyle or CHOICERenovation.