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Why construction loan risk management software is so valuable

Abrigo
September 21, 2022
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Driving efficiency and reducing risk

Construction loan risk management software leverages technology and sound process management to pull construction lending away from its manual roots.

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Building a stronger portfolio
Construction loan risk management

Years ago, lenders used spreadsheets and manually entered calculations in order to keep up with the complex and tedious details of each and every construction loan they managed. It could take days to receive inspection details and approve draw requests. Fast forward to today, where financial institutions can have custom reports at their fingertips and inspections can submit details from the construction site through their construction loan risk management software.

Construct was created  to streamline the construction loan management process, so bankers could spend less time on spreadsheets and get back to serving their communities. With automated draw exports, budget calculations, and inspections, bankers are adding days of interest income back to each draw. At the same time, financial institutions are seeing a stronger relationship with borrowers, builders, and other stakeholders that appreciate having an efficient, easy digital solution to work with.

Modernization

The days of waiting a week for draw approvals and inspections are gone. Financial institutions are now using construction loan management software like Construct to streamline their draw approval process. Construct's digital workflow accelerates draw cycle times, providing approvals days after than the manual process and can increase draw interest by 8-12%. 

Automated inspections also accelerate the draw approval process by instantly providing bankers with the information they need to fund a draw request quickly. This can add additional days of interest income to every draw. These features, combined with digital notifications, are helping over financial institutions streamline and modernize their construction loan management process today.

Construction loan management software
Managing construction loans effectively

The amount of manual data entry needed to manage a construction loan portfolio can be daunting, not to mention ineffective. Without constant analysis, problems can arise within a spreadsheet without an admin noticing. Construct uses budget and loan data imports to reduce the amount of time needed to enter data into the system. The ability to upload loan data eliminates the need to manually re-enter information and reduces the risk of human error.

Automatic budget calculations automatically calculate remaining budgets based on draws, further reducing the risk of human error and allows lenders to spend less time doing manual calculations. 

Construction Loan Management Benefits

This type of lending is a significant portion of many financial institutions’ portfolio. Construction loan management tool benefits include:

– Maximizing ROI by taking days off of your turn-around time.

– Mitigating risk by providing detailed audit trails and real time alerts. Spreadsheets can’t alert you when a loan is overfunded.

– Improving the experience with borrowers, builders, and other stakeholders by offering an easy-to-use mobile solution.

Accordingly, one of the best features of a construction loan management tool is that it provides a detailed audit trail for each property and real-time reporting for an institution’s construction loan portfolio. This allows for efficient and informed oversight from an executive level. One of the most popular features of Construct is our custom reporting feature. At the click of a button, this automated feature provides a real-time look at a bank’s construction portfolio, decreasing risk and helping institutions make faster business decisions. 

Construction lending, traditionally a high-risk industry, is ripe for change and digital transformation. Construct maximizes risk mitigation for our clients. In fact, auditors love us! Construct helps reduce risk by providing a detailed audit trail and real time alerts to users. You have 24/7 access to loan monitoring on any mobile device.

Finally, the construction industry is one of the most profitable industries in the US and it’s only getting bigger. Unfortunately, it can be time-consuming and manual for lenders, especially as a financial institution grows. Construction loan management software can solve this by automating the workflow, providing real-time analytics, and helping avoid costly mistakes.

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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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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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