What the borrower does is outside your control and has a huge effect on timelines.

She knew the area, was a fellow investor, knew all the key players; contractors, lawyers, title companies etc.

The only language I see is:"Borrower will not, without the prior written consent of SBA, make any distribution of borrower's assets, or give any preferential treatment, make any advance, directly or indirectly, by way of loan, gift, bonus, or otherwise, to any owner or partner or any of its employees, or to any company directly or indirectly controlling or affiliated with or controlled by borrower, or any other companies"

Might be an ideal time for you to jump in and learn who some of the players are as well as get up-to-the-minute insights on investing here.

I'd check with my attorney, some states limit the dollar amount that an LLC can be liable for, so at a certain point the cash and equity controlled by your LLC might be irrelevant and one or two could be plenty. 

The idea is to be able to control a property without using funds which are being reserved for investing projects. 

This is total Pareto Principle.  80% (or more) of your time will probably be devoted to placating him over this minutiae.Honestly, you've let him take control and it's time for your to reassert yourself. 

All that being said, you can actually take control of a property and drive results yourself, unlike the stock markets. 

They control the timing and have direct access to all parties involved.

If it is local you have control, you can self manage, and you have experience doing refurbs etc.