Team Contract Simply enjoyed a few days in San Francisco attending the 2018 LendIt Fintech Conference. In addition to meeting 100’s of lenders interested in construction loan management software, we had a chance to announce a new partnership and attend a few amazing sessions.
In a “sunshine and rainbows” world, construction contractors do a stellar job, their draw request is approved, and lenders pay up - everyone is happy for the rest of time. Alas, as we all know, this is not always how construction loan management goes ‘round, and often both lenders and general contractors find themselves in a pickle with a contractor due to a late payment or slow payment processing. The pickle, in this case, is called a Mechanic’s Lien.
One of the hottest trends right now is machine learning in banking. The eye-opening implications technological advances like machine learning have on construction loan administration and process automation are now reaching the surface. Many of us experience the outcomes of machine learning every day. For example, Netflix and Amazon use algorithms to give us a movie or shopping recommendation based on our prior behaviors. CitiBank utilizes machine learning to evaluate “big data” to prevent fraud and monitor potential threats to customers. Even the United States Postal Service performs character recognition of handwritten characters using an algorithm and a computer vision system behind it.
Modern technology aims to simplify all processes and aspects of human existence. And the tasks associated with managing the construction draw process are no exception. Given the fact that the construction draw process has been a decades-long time-consuming challenge for lenders and borrowers, construction loan software aims to simplify and speed up the process by automating various processes and allowing relevant parties to monitor the project in real time.
Not only does he greet us every time we pull out a C-note, but Benjamin Franklin is also credited with the famous adage, ‘time is money.’ Old Ben was onto something. Time is, after all, one of our most valuable resources. When it comes to profitability, it often helps to do things as best and fast as possible. Construction loan administration is no exception.
Topics: Construction Loan Administration
Lenders want to release a draw request as quickly as possible. Why? Because a construction loan does not start accruing interest until the funds are disbursed. On the other side, the borrowers want money to pay vendors and contractors as quickly as possible. Everyone has the same incentive - to approve a draw request as quickly as possible. And everyone benefits from faster payments.
Topics: Construction Draw Process
Although post-closing management of construction loans is an area ripe for game-changing process improvement, it has been largely underserved by technology. There are many variables in construction loan administration including draw processing, review of AIA G702 and AIA G703 forms, borrower to contractor payment and lien release processing, and a million other details. Much of the work is done manually and it's a lot for both construction loan administrators and borrowers to juggle. Enter FinTech and construction loan software for commercial lenders and real estate developers.