I'm pretty sure your thinking of Deadly Prey from 1986. The plot, as taken from Wikipedia is
Colonel Hogan rents his mercenaries out to anyone with the right
price. This time it's businessman Michaelson. A deal is struck, and
Hogan recruits new troops. For training, he orders his troops to
kidnap innocent people, take them to the forest and hunt them.
Unfortunately this time, they picked the wrong guy, Mike Danton.
Danton, a Vietnam veteran, is ambushed while taking out the trash.
Taken to the forest, he is stripped to his shorts, greased up and told
to run. The mercenaries hunt Danton, but are meticulously picked off
one by one. The troops report this to Colonel Hogan, who sends a task
force with his best man, Lieutenant Thornton. One of this elite combat
unit is Jack Cooper. Cooper and Danton realize who each other are
while trying to kill each other. Cooper has not seen Danton since he
took a bullet for him in 'Nam. With his new-found friend, Danton
continues to punish the mercenaries, and get back to his wife Jaimey.
Like all good villains, Hogan uses Danton's family against him, but
this angers Danton. After storming the military training camp Danton
arms himself up, and destroys all traces of Hogan's mercenaries.
There is an extended trailer on YouTube here. At the 5:50 mark you can see the scene where Denton cuts of the guys arm and beats him with it.
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