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What to look for in construction loan automation software

Kate Stoneburner
November 2, 2022
Read Time: 0 min

3 features that can improve speed and efficiency

Construction loan automation eliminates manual processes, saving time and reducing human error. Here's what to look for in a software.

You might also like this whitepaper: "10 ways construction loan monitoring software saves time."

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Reduce manual processes
Selecting the right construction loan automation software

A typical manual construction loan process today involves loan, budget, and inspection data coming in at different times to different staff members in different forms. Sorting, collecting, and integrating that data can be tedious—especially due to errors or the need to make other changes. Draws are often requested via email or phone and managed manually on a spreadsheet, and user errors or miscommunications can lead to overfunded or underfunded clients. Inspectors may take notes by hand, store photos on their personal laptops, and send in information haphazardly to be entered into a spreadsheet. And reporting means aggregating spreadsheets by hand.

Construction loan automation, when used well, can cure many of these speed and efficiency problems. But not all technology is made equal, especially when it comes to lending software. The following are three features to look for in construction loan software that can improve financial institutions’ speed and efficiency:

Mobile

"Mobile software means users can access it anytime and from anywhere they have internet -- even from a cell phone. Cloud-based software offers the most mobility because data is in one place, which can cut down on processing times by keeping data in one place and making it accessible to multiple people at once. But when software shopping, make sure that the product is both mobile and collaborative. Many older construction software products are excellent for the bank office but are not collaborative with inspectors, builders, and borrowers because the users’ systems are not connected. Matt Johnner, BankLabs President and board member of Encore Bank, recommends that financial institutions look for a tool with online access for multiple stakeholders, including a portal for submitting inspection material and draw requests. Johnner also advises that banks provide proper training to staff members who haven’t used collaborative construction draw software before. “Technology can be great if used well or be a distraction if not used well,” he said. “It is not the cure without great processes, so you need staff to be trained. But when that simple condition is met, technology can be invaluable in the construction loan process.”

 

Modern

Text notifications, digital workflows, and e-sign capabilities are all modern construction loan automation features that help institutions take a predictive and proactive approach to lending. Digital workflows and fast notifications can reduce the waiting time that often occurs between the actions of inspectors, builders, borrowers, and bankers. For example, a draw request from a borrower can be set to alert the inspector, speeding up the time between requests and follow-up actions. Instant real-time reporting is a digital workflow feature that shows great value to builders and borrowers who want to see their draw available immediately. E-sign capabilities can also speed up cycle times, making sure all of the invested individuals stay up to date and eliminating the need to drive into a branch for a signature.

 

Customizable

Custom reporting may seem like a bonus feature, not a key component of construction loan automation. But every stakeholder in a construction loan has separate interests, and the more financial institutions can customize reports to each person involved, the more relevant information, awareness, and control you give lenders and their customers. Master construction reports that show all projects with real-time status are impressive to boards and regulators. Work-in-progress reporting with cycle time awareness can tell lenders how long ago a draw was created. Draw interest optimization reporting can show management which loans consistently have draw available—and therefore which lenders are not moving projects along quickly enough. This can help managers look out for lenders who may be overwhelmed, need more training, or require a lending assistant to stay on top of draw interest and increase profit. Custom reports can also show over-funded loans and total exposure by borrowers, helping to reduce an institution’s risk.

Prioritize your portfolio
A proactive and productive approach

Mobile, modern, customizable construction loan software can make your institution more proactive and productive in the construction market. Seek out features that reduce manual touchpoints and improve the borrower experience. With less time spent on manual tasks and more time spent analyzing projects and understanding the portfolio, both lenders and borrowers will have a better construction lending experience.

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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

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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.

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