Working With a Construction Lender? Ask These 3 Questions
Construction lenders are a dime a dozen. But how do you know which one to choose?
Finding the right lender for your project can take time, but it’s important to be selective. Choosing the right construction lender can make or break your project. To make sure you make the right choice, ask prospective lenders these 3 questions:
1. Do You Use Construction Payment Software?
Lenders that still lean on manual draw processes are likely to take longer to turn around payments. Manual data entry is heavy on paperwork and also increases the risk of errors.
A construction lender that uses digital loan processing and construction loan payment software will be able to help you get your project completed on time. No missed or delayed payments. No stacks of paperwork. No errors. No problems.
Choosing a lender that’s experienced in using construction payment software will benefit your project by speeding up draw processes and eliminating excessive paperwork and potential mistakes. It will allow you to spend less time trying to appease the lender and more time building.
2. How Long Does the Draw Process Take?
As a contractor, it’s crucial for you to complete your projects on-time and on-budget. The draw process from your construction lender plays heavily into your ability to do just that. Ask prospective lenders what their average turn-around time for draws looks like so that you know whether you can reliably complete your projects by working with them.
If your lender uses a construction payment software and has a digital draw process, chances are that their turn-around time is faster. Manual processes take longer. The industry average for processing draw requests is about 7 days [LevelSet]. But digital draw systems can cut that timeline down to less than 24 hours.
A key part of the draw process is the draw inspection. Inspections are a valuable tool for lenders to ensure your project is on track and that you are using the funds as outlined in the draw schedule. Ask the lender about draw inspections since excessive inspections can lead to difficulties and delays.
3. Do You Have Good Working Relationships with Other Contractors?
A valuable construction lender will have a list of references a mile long. Who wants to work with a lender that doesn’t have any experience? Or, even worse, one with zero client retention? A
construction lender that has proven success with other contractors, owners, and builders is far more likely to be an asset to your project than a liability.
CoFi is the Solution
CoFi is bringing the construction industry up to date by digitizing construction payment processes. Our software bridges the gap between contractor and construction lender by streamlining communication and simplifying the draw process without digital solutions. We also have an in-house team of inspectors that will keep your projects on schedule.
Choose a lender that uses CoFi, and see how our software can help improve your business. Schedule a personalized demo today!