Rabbet, the leading provider of construction finance software, today released the 2022 State of Construction Finance Report, which dives deep into the perceptions of construction finance processes and the relationship between lender and borrower.
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Key findings include:
- 85 percent of respondents agreed that software has helped their team gain efficiency and productivity
- 55 percent of draws are completed without errors according to lenders, whereas developers report that 63 percent of draw packages submitted are approved without change requests.
- 47 hours is the average time developers spend every month outside of the standard draw preparing a project report for equity partners or owners
To compile the data, Rabbet distributes a survey each year to lenders and developers representing a diverse portfolio size. The survey questions addressed the impact to their construction finance process, data management and collaboration. The data from 2022 was then compared to data collected in prior years. This report follows up on trends Rabbet captured in 2020 and 2021 at the peak of the pandemic.
This year’s report revealed that communication channels are starting to improve, technology is being implemented and relied on, and that lenders and borrowers have different perceptions of the current process but their goals for the future are aligned.
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Now that processes are more digital, information that was previously shuttled back and forth between employees and systems is now more centralized and accessible to all parties in real time. Even with construction lenders claiming that almost 56% of their current construction loan management process could be automated to save time or reduce errors, over 86% of both lenders and developers were at least somewhat confident that their information was secure. This is a major improvement from last year’s report. The openness to technology last year and the implementation and maintenance of those processes has caused process risk to seemingly stabilize for the first time since this report has been released.
“The construction finance process in its entirety was in need of modernization and it’s exciting to see the industry realizing that there could be a better way to do things.” said Will Mitchell, CEO of Rabbet. “Lenders and developers are understanding how technology can add efficiency and productivity to what has been a pretty antiquated process. The pandemic forced the industry to adopt technology and now that the pandemic is over, we were curious to understand if processes would go backwards, and the reality is the progress towards efficiency and enhanced risk management has only continued to accelerate.”
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