Construction loan administration is now a vital part of the construction lending process. Whether an institution's construction lending portfolio is big or small, managing the risk of your portfolio is critical to success.
Many financial institutions prefer to keep their construction loan administration in-house, many utilize digital tools to help their staff become more efficient.
This process includes some or all of the following:
- Reviewing and approving borrower’s construction loan application and related documentation
- Processing payments to contractors and subcontractors
- Monitoring progress
- Disbursement administration
- Closing out the construction loan
- Reporting for all parties
3 ways construction loan administration software can help
Construction loans typically have several parties involved. They are usually long-term and require a lot of documentation to be submitted to the lender by stakeholders. This is where loan administration software comes in handy for construction loans.
The benefit of construction loan administration software is that it will take care of all the tedious paperwork. In addition, a digital tool benefits financial institutions by offering a seamless, updated process. For example, inspectors can submit documentation on their phones or tablets from the construction site instead of returning to the office to submit it.
Three benefits come from using an administration service for your construction loans:
- It takes care of all the tedious paperwork for you, which would otherwise be time-consuming and difficult. This speeds up your cycle time which increases draw interest income
- It streamlines the process, so errors are minimized
- It keeps the funding cycle moving, notifying each party of updates
- It allows each participant to customize reports to suit their role and needs.