As a construction lender, you know that bad weather can have a serious impact on construction sites. However, we have found that not everyone working with construction loans understands the long-term impact bad weather can have. In fact, in some cases a single storm could cause up to a 90-day delay.

Keep reading to learn more about this. If you are looking for ways to better budget money and time, and to keep in better contact with borrowers, project managers, and everyone else involved in the project, contact Fund Control at 800-625-5972 for a free demo of our fund control software.

Bad Weather Can Add Costs to Any Construction Project

This may seem obvious but it is important to start at the beginning: Bad weather can add costs to a construction project. Any type of weather delay or storm can add costs that were not covered or considered in the original construction loan. There may be a need for repairs to damaged equipment or the project, there may be a need for interest reserve, or the builder may have general conditions costs.

There are likely to be options open on how to handle this situation, including reallocating between line item savings, or a rebalance of the loan. Ideally, the builder would have built in a budget for the potential of issues such as these. If not, there may also be the need to offer or accept a 60 – 90 day delay in the build cycle, which could require a loan extension.

Borrowers Can Be Proactive to Prevent Delays

The fact of the matter is that there are some weather situations that cannot be planned for or foreseen. For example, you cannot prepare for an earthquake. However, borrowers can plan for more common weather issues. Start by ensuring that the borrower has an up to date SWPPS (Storm Water Pollution Prevention Plan) as well as BMPs (Erosion Control and Best Management Practices. This helps minimize the impact that water will have on the site.

Second, it is essential that your borrower is ready to pump water to an approved, offsite receptacle. This isn’t necessary for a few days’ worth of rain, but if it rained hard or long, then this may be the best way for the borrower to dry out the soil faster so they can get back to building the project.

The Key is Communication – And We Can Help with That

You must keep in constant contact with your borrowers. This is hard to do if you have many loans or if weather has affected many jobs – or is it? It does not have to be. At Fund Control we provide unique solutions to fund control that allow for everyone involved in the project to quickly and easily communicate and check on the status of the project. Contact us now and request a free demo to learn more.