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How construction loan administration can help you

Abrigo
September 27, 2022
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Construction loan administration

Find out how today's technology has changed the shape of construction loan administration, creating a better customer experience and reducing risk.

You might also like this webinar, "How to manage a high-performing construction loan portfolio."

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What is construction loan administration?
Move from manual to automation

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.
Construction loan management software
Essentials of construction loan management software

Construction loan management software helps lenders manage their financial transactions. The best software should be able to solve the following problems:

  • It should be able to generate highly customizable reports
  • The user interface and navigation should be easy to use
  • It should provide real-time updates on the current status of payments and loans

Simplify managing construction loans

Traditionally, construction lenders must manage the workflow, ensuring that the correct documents are submitted at the right time and coordinating paperwork with the borrower and other parties. With construction loan administration software, all lenders need to do is upload their docs and get a complete dashboard of their construction loans. 

Increase draw interest and efficiency

Lenders always look for ways to manage risk and provide more efficient services. A large part of the process is drawing interest from clients that want to finance their next project. The problem is lenders spend hours coordinating projects, extending the drawing process by days. That’s where technology can help. With software, lenders draw more interest in less time and make more efficient deals by automating the process.

Software can automate the process of managing construction loans. It can provide lenders with automated systems to manage all the necessary documents, calculations, and reporting allowing lenders to focus on what matters most – serving their community. No more manually calculating interest, no more uploading documents one by one, no more copying and pasting data from one form to another. The age of spreadsheets is over.

Stay up to date on credit risk. Watch the webinar, "Credit risk management: Best practices & examiner priorities in uncertain times"

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About the Author

Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo’s platform centralizes the institution’s data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth. Make Big Things Happen.

Full Bio

About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

Make Big Things Happen.

 

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Abrigo acquires construction loan management solutions

Coupled with our lending suite, Construct and +Pay from BankLabs enable end-to-end automated residential/commercial construction loans.

Read the press announcement

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