Construction Loan Monitoring and Draw Process
Monitoring construction loans can be a complex process, as it involves keeping track of the progress of the construction project and ensuring that the loan is being used as intended. Here are some steps you can follow to effectively monitor a construction loan:
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Understand the terms of the loan: Before you begin monitoring the loan, it's important to fully understand the terms of the loan agreement, including the loan amount, interest rate, repayment schedule, and any penalties for late payments or default.
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Set up a system for tracking progress: You will need to set up a system for tracking the progress of the construction project, including any milestones that need to be reached and any payments that are due. This could be as simple as using a spreadsheet to track the project's progress, or you may want to use specialized software to help you manage the loan.
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Keep in touch with the borrower: Regular communication with the borrower is key to effectively monitoring the loan. You should discuss the progress of the project with the borrower on a regular basis, and be prepared to provide assistance if needed.
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Review the borrower's financial statements: You should also review the borrower's financial statements regularly to ensure that they are in good financial health and able to make the required loan payments.
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Take action if needed: If you notice any issues with the construction project or the borrower's financial situation, it's important to take action to address the issue. This could include providing additional funding, renegotiating the loan terms, or even taking legal action if necessary.
Construction loan draw process
A construction loan draw is a payment made from the construction loan to the borrower during the construction of a building or other structure. The purpose of the draw is to provide the borrower with the funds they need to pay for the materials and labor required to complete the project.
The construction loan draw process typically involves the following steps:
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The borrower submits a request for a draw to the lender, along with supporting documentation such as invoices and receipts for materials and labor.
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The lender reviews the request and determines whether the borrower is entitled to a draw based on the terms of the loan agreement and the progress of the construction project.
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If the borrower is entitled to a draw, the lender will release the funds to the borrower, either by issuing a check or transferring the funds directly to the borrower's bank account.
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The borrower uses the funds from the draw to pay for the materials and labor required to complete the project.
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The lender may require the borrower to submit regular progress reports, along with supporting documentation, to ensure that the funds from the draw are being used as intended.
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As the construction project nears completion, the borrower may need to submit a final draw request to cover any remaining costs.
Overall, the construction loan draw process is an important part of the construction financing process, as it ensures that the borrower has the funds they need to complete the project on time and within budget.
Loan draw schedule
A loan draw schedule is a document that outlines the planned disbursement of funds from a construction loan. The draw schedule typically specifies the dates on which the borrower is entitled to receive payments from the loan, as well as the amount of each payment.
The loan draw schedule is typically based on the construction schedule for the project, with payments being made on a regular basis as the project progresses. For example, a draw schedule might specify that the borrower is entitled to receive 25% of the loan amount upon completion of the foundation, 50% upon completion of the framing, and so on.
The loan draw schedule is an important part of the construction financing process, as it helps to ensure that the borrower has the funds they need to complete the project on time and within budget. It also helps to protect the lender, as it ensures that the borrower only receives funds as they are needed, rather than receiving the entire loan amount upfront.
Streamlining Loan Origination ensures your team can make better decisions, faster with automated document collection and reminders as well as ongoing loan management. Loan Origination is an important part of managing borrowers financial and reporting documents for loan monitoring. Almost 70% of banks still rely on some combination of spreadsheets, core ticklers, or other manual processes.
BankStride is a digital banking platform you've been waiting for. BankStride makes it easy for banks to automate loan documents, exceptions tracking, loan reporting and covenant monitoring. No more managing checklists, searching for files in emails, or waiting on updates from other parties. Just create your requests and let BankStride do the work for you.
Many Banks and lending companies depend on non-public client information to provide their
services. Examples include:
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Automate Document Gathering
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Checklist For Loan Reporting Requirements
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Frictionless Customer Experience To Send Documents
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Create Credit Exceptions & Tickler Tracking
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Automated Loan Monitoring and Loan Compliance
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Loan Reporting, Risk & Financial Reporting
Without a dedicated tool, professionals would have to manually manage checklists and calendar
events to keep track of all required information. BankStride automates this work while improving
security and reporting.
Why BankStride platform
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BankStride is a web-based software solution for commercial banks and credit unions that works with customers to manage loan agreements and eliminate credit exceptions. FileStride improves credit exception management by reaching beyond the walls of the bank to work directly with customers.
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BankStride is like autopay for customer information.
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With BankStride, banking teams can schedule recurring requests for documents like financial statements and tax returns, compare actual and threshold covenant values (e.g. minimum DSCR), and send compliance certificates for signature via DocuSign.
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Customers respond to information requests much like paying an online invoice – they clearly see what’s required of them and they act. Customers can respond using a login-less portal or by email – no account or password required.
How does this help banks
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A borrower’s risk profile can change significantly over the years that follow a lending event. Managing loan agreement adherence through reporting and internal monitoring is an ongoing and tedious battle for banks.
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Banks that pursue superb loan agreement management are faced with handling complex recurring tasks using the basic tools of email, spreadsheets, and calendar ticklers. Banks that let this work fall behind risk delaying their awareness of problematic loans or operating practices, jeopardizing capital and reputation.
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With BankStride, banks gain high-resolution loan agreement monitoring that saves time and delights customers.
How does our bank customer use BankStride
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Our bank customer uses BankStride to schedule and automate the activities required to monitor loan agreements.
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For example, BankStride has proven effective in managing revolving lines of credit. BankStride automatically requests and reminds customers to submit monthly AR and AP listings, inventory analyses, and borrowing base certificates each month.
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BankStride reminds the banking team to test various financial ratios. The results of the customer’s actions and the ratio testing all roll up to per-banker and per-office reports that can be run on-demand in seconds.
BankStride is powerful for bankers
LOAN
MONITORING
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Track financial reporting, covenants, and certificates.
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Issue compliance certificates for signature via DocuSign.
REPORTS AT EVERY LEVEL
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Bank leadership can drill down to identify pockets of risk and underperformance.
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Every member of the team knows where to focus.
FLEXIBLE INFORMATION MANAGEMENT
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BankStride supports one-off and recurring information requests.
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Flexible storage layer configuration options available.
Easy for bank customers
NO USERNAMES
AND
NO PASSWORDS
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Customers receive tokenized links that enable portal access.
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Bankers can request information from anybody with an email address.
UPLOAD OR EMAIL
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Easy to use customer portals show the customer exactly what is needed.
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Email-based file ingestion enables customers to email files in response to requests.
TIMELY ALERTS
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Reminders and alerts are aggregated to prevent information overload.
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Alerts can be toggled per-user.
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Customizable reminder schedules.
STREAMLING LOAN UNDERWRITING, LOAN MONITORING, COVANENTS, FINANCIAL REPORTING
Automate Bank customer information requests for covenant monitoring , loan reporting, financial reporting and exception handling.
FiStride allows you and your customers to exchange information with zero friction so that you can reduce credit exceptions and recover valuable time.
The Workspace view in FileStride gives you a holistic overview of what you have, what you need, and where your customer stands.
Get a quick pulse check on where your projects stand with the Dashboard view in FileStride.
The Workspace view in FileStride gives you a holistic overview of what you have, what you need, and where your customer stands.
BANKERS STREAMLINE LOAN REPORTING DOCUMENTS
Know what you have, know what you need.
Why BankStride?
We're the digital banking solution you've been waiting for.
We make it easy to automate your loan reporting and covenant monitoring. No more managing checklists, searching for files in emails, or waiting on updates from other parties. Just create your requests and let BankStride do the work for you.
How it works
BankStride combines checklists with cloud storage to help you communicate and monitor your information requests and covenants.
All it takes to get started:
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Request items by creating projects for one-off items or templated lists.
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Review incoming files from your client and mark items as satisfied or complete.
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Repeat with automatically recurring requests and reminders.
Who it's for
BankStride is a solution for individuals, teams, and banks that need a better way to request information. We've facilitated thousands of customer relationships and transactions with teams in banking, accounting, consulting, and advisory services, just to name a few.
FEATURES
Bankers increase efficiency and improve loan risk and compliance with loan monitoring, reporting and exceptions.
Know what you have,
know what you need
Create recurring requests with status indicators, reports and automatic nudges that keep everybody in the know.
Many ways in,
password optional
Customers have the option to send files through email or a login-less portal. Either way, we get the files where they need to go.
Built to empower bankers
Track and monitor financial reporting, covenants, and certificates, and identify pockets of risk and non-compliance.
Structured for you and
your team
Add your colleagues with a single click, and manage access permissions so the whole team can get the job done.
We've facilitated over 1,000,000 client interactions...and counting.
