Skip to main content

5 reasons construction loan software is vital for financial institutions

Kate Stoneburner
October 18, 2022
Read Time: 0 min

Top benefits of construction loan software for bankers and clients

Why many banks and credit unions are turning to fintech for construction loan automation.

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

WATCH

Five key benefits
Advantages of construction loan software

Construction loans are a major source of income for many financial institutions, but the complexity of these long-term projects requires many stakeholders, documents, signatures, and approvals. Construction loans have always been considered risky for banks because they involve long-term exposure to collateral and there are often no other tangible assets.  To stay on top of their portfolios, many banks are turning to fintech for help. The process of getting a construction loan is not as tedious and time-consuming as it used to be. It has become so much simpler that some people are even able to get a construction loan within just a day or two.

Ease of documentation

Well-organized financial documentation is a critical component of a successful construction loan process, and construction loan software provides a more efficient way of lending money to construction projects while reducing risk. Rather than utilizing multiple lines of communication or a spreadsheet system for keeping track of updates, construction loan software creates one hub for storing documents, photos, signatures, and approvals. With better storage and a progress-monitoring system in place, banks can avoid delays and prevent lenders from losing valuable interest income while keeping records organized and easy to audit.

Customer benefit

Construction loan software helps developers and contractors by simplifying the communication process from pre-construction to post-construction. The software allows builders to upload documents and photos from the field, manage their finances, and track project progress all in one place. Automatic notifications alert stakeholders when inspections are uploaded or when the next step of the loan process is ready. Having all documents at their fingertips can help contractors stay on top of projects and speed up funding cycle times. 

Time-saving automation

Rather than waiting for a phone call or trading emails back and forth, users of commercial loan software get an alert immediately when an action is taken or when an approval is waiting for them. This cuts down on the back-and-forth emails, double-checking spreadsheets, and games of phone tag. Plus, every step has been documented along the way. No more pulling up that last email to see what has previously been discussed or searching inboxes for documents. Softwares use digital workflow to accelerate draw cycle times, providing approvals days faster than the manual process and increasing draw interest.

Reporting functionality

Financial institutions are constantly evaluating loan profitability and progress. Rather than manually compiling spreadsheet information, commercial construction loan software like Construct can pull any report needed, whether it’s for one specific project or an entire portfolio. Financial institutions can customize reports to fit the needs of any internal assessment or answer any question that auditors may pose.

Cooperative software

Choosing a construction loan software can be tricky depending on the other systems already in place at a financial institution. Construct’s export system means that lenders do not have to re-enter loan information that they use in Construct into their core system. Data can be exported as a file and uploaded to the institution’s core, saving time and reducing the risk of keying errors. A good construction lending software should be able to work alongside multiple LOS systems and core systems, making integration simple.

Customer perspective
Construction loan software and the future of banking

Construction loan automation in banking is a fast-growing trend that will change this segment of the banking industry. With its speed, efficiency, and custom reporting features, construction loan software can increase draw income, enhance borrower experience, and mitigate risk. Financial institutions considering this software help lenders gain a better understanding of their portfolio and manage it with more confidence.

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

keep me informed Watch Webinar
About the Author

Kate Stoneburner

Content Marketing Manager
Kate Stoneburner is a Content Marketing Manager at Abrigo, where she works with industry thought leaders to create digital content that helps financial institutions better serve their customers. Before joining Abrigo, Kate managed social media and produced articles for Campbell University’s quarterly magazine and other university content initiatives. She earned

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.

 

Looking for Banker’s Toolbox? You are in the Right Place!

Banker’s Toolbox is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the login button here, or the link in the top navigation, to log in to Banker’s Toolbox Community Online.

Make yourself at home!

Looking for MainStreet Technologies? You are in the Right Place!

MainStreet Technologies is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the contact us button here, or the link in the top navigation, to reach product support for your MST products.

Make yourself at home!

Looking for Sageworks? You are in the Right Place!

Sageworks is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the login button here, or the link in the top navigation, to log in to your Sageworks products.

Make yourself at home!

Looking for Farin? You are in the Right Place!

Farin is now Abrigo, giving you a single source for all your enterprise risk management needs. Use the login button here, or the link in the top navigation, to log in to your Farin client portal.

Make yourself at home!

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

BankLabs Logo Abrigo Logo