Enhancing Workflow Efficiency in Construction Lending with a Loan Software (+ Top Features to Look for)

If you’re offering construction loans, you know they’re a smart way to bring in revenue and build long-lasting relationships with borrowers. These loans often lead to permanent mortgages, allowing you to work with clients long after the project wraps up. That continuity helps keep them loyal, reducing their chances of seeking out other lenders.

But let’s face it—managing construction loans isn’t easy. It’s a whole different ball game compared to traditional mortgages. You’ve got multiple disbursements, compliance hurdles, and a slew of stakeholders to keep in the loop. One missed milestone or miscommunication can derail a project. This is where automating the workflow becomes not just helpful but essential.

In this post, I’ll dig into the unique challenges of construction lending and discuss how the right loan software can make your job a whole lot easier.

The Unique Workflow Challenges in Construction Lending

Construction loans come with distinct complexities if your workflow depends on spreadsheets. Below are the primary challenges lenders face and why automation can be a game-changer.

Construction financing requires funds to be released in stages, tied to specific milestones. This could include milestones like laying the foundation or finishing the exterior. Tracking these milestones manually is labor-intensive, and missing deadlines can delay the project.

How Automation Helps:

Automated draw management systems track project progress in real-time. It can also trigger disbursements based on verified milestones. This ensures that funds are released promptly, avoiding delays and reducing administrative work.

Construction loans come with stringent compliance requirements. Lenders must manage lien waivers, permits, and project documentation throughout the loan’s lifecycle. Missing a critical document can lead to penalties, project delays, or legal complications.

How Automation Helps:

Automation ensures that all compliance-related documents are tracked and updated in a centralized system. Lenders receive automated alerts when permits need renewal or lien waivers are due. This reduces the risk of non-compliance and saves time.

In construction lending, borrowers, contractors, inspectors, and lenders must stay aligned. Miscommunication among these parties can lead to delays, rework, and cost overruns.

How Automation Helps:

Automated systems provide a shared platform where all stakeholders can access up-to-date information. With real-time dashboards and notifications, your communication improves. This keeps everyone on the same page and minimizes misunderstandings.

The construction loan lifecycle is complex. It involves multiple steps, including draw requests, inspections, and final loan closeouts. Tracking these manually can be time-consuming and prone to errors. This can also potentially stall your projects.

How Automation Helps:

A loan servicing software integrates with the post-origination phases of the loan lifecycle. With this, lenders can manage draw requests, schedule inspections, and track funding on a single platform. This reduces administrative burdens and ensures that the loan stays on track.

Top Features to Look for in Construction Loan Management Software

Lenders need the right tools to successfully navigate the complexities of construction lending. Below are the must-have features of an LMS—and how Bryt Software offers solutions tailored to construction loans.

Managing disbursements based on milestones is crucial in construction lending. With Bryt’s automated draw management tools, lenders can release funds with precision.

• Milestone-Based Disbursements: Funds are automatically released in stages as milestones are completed, eliminating manual tracking.
• Verification Tools: Inspection reports, receipts, and invoices are integrated into the system, ensuring that disbursements are accurate and based on verified progress.
• Real-Time Cash Flow Monitoring: Stay on top of cash flow across all projects, ensuring funds are allocated efficiently and risks are minimized.

In addition to construction expenses, lenders must manage non-construction costs like property taxes and insurance. Bryt’s escrow account management module automates these processes.

• Multiple Escrow Accounts: Easily manage multiple accounts for taxes, insurance, and other expenses across projects.
• Automated Payment Scheduling: Ensure timely payments of taxes and insurance, preventing penalties and lapses in coverage.
• Complete Transparency: Track and document every transaction, giving borrowers and lenders a clear view of financial activity.

Construction lending involves a significant amount of documentation. Bryt Software’s custom templates simplify this process by automating document creation.

• Centralized Document Creation: Automatically generate loan agreements, draw requests, and progress reports using pre-built templates.
• Time-Saving Customization: Use master templates to ensure consistency while reducing manual effort.
• Cloud Storage and Access: Store all documents securely in the cloud for easy access and real-time collaboration.

Construction loans often involve valuable collateral, which must be properly tracked and insured throughout the project. Bryt’s asset and insurance module helps lenders manage this critical aspect.

• Centralized Collateral Management: Monitor all assets tied to loans in a single dashboard to ensure proper documentation.
• Insurance Monitoring: Automatically update policy information to maintain compliance with insurance requirements.
• Risk Mitigation: Get alerts for under-collateralized loans or expired insurance policies to minimize financial risks.

Construction loans require coordination across various systems. Bryt’s integration tools streamline operations by connecting with essential platforms like accounting tools and CRMs.

• Bryt’s API Advantage: Bryt Software’s API enables effortless third-party integrations, allowing businesses to maintain a single, unified lending platform. 
• Cloud-Based Real-Time Sync: Keep data synchronized across systems, minimizing duplication and reducing errors.

Interest billing for construction loans can be complicated due to incremental disbursements and shifting timelines. Bryt automates interest calculations and payment processing.

• Automated Interest Calculations: Ensure accurate financial records by calculating interest based on incremental disbursements.
• ACH Integration: Securely process payments for borrowers.
• Flexible Payment Scheduling: Align payment schedules with borrower preferences for smoother operations.

Construction lending requires close monitoring of multiple projects. Bryt’s dashboards and reporting tools offer comprehensive insights.

• Comprehensive Insights: Get an overview of loan performance, project milestones, and borrower payments in one place.
• Custom Reports: Generate detailed reports to analyze project progress and loan activity, enabling better decision-making.

Managing relationships with multiple stakeholders is crucial. Bryt’s CRM module ensures efficient communication and coordination.

• Detailed Contact Records: Store essential information for contractors, inspectors, and borrowers in a centralized system.
• Interaction Tracking: Log all communications for easy reference, ensuring nothing falls through the cracks.
• Real-Time Collaboration: Improve team coordination with access to up-to-date contact information and interaction history.

The Bottom Line

Construction loans offer valuable opportunities, but managing them requires the right tools. By automating disbursements, providing tools to ensure compliance, and streamlining stakeholder communication, Bryt Software helps lenders conduct their operations efficiently and minimize risks.

Ready to automate your construction lending process?

Discover how Bryt Software simplifies loan management and keeps your projects on track.

Bob Schulte

About Bob Schulte

Bob Schulte, CEO, Bryt Software is the visionary leader behind Bryt’s groundbreaking approach to loan management. With 30+ years of experience in the SaaS industry and an impressive 25 experience years of education, Bob brings diverse SaaS expertise to the table. He is known for his innovative approaches and commitment...