Rabbet, a leading provider of construction finance software for commercial real estate lenders and developers, today released the 2021 State of Construction Finance Report which dives deep into how processes and perceptions of construction finance have changed as well as what these processes could look like in the future. Key findings include:
- 60 percent of respondents are using more digital processes than prior to the pandemic
- 95 percent of respondents felt a part of their process could be automated to reduce time and errors
- More than a third of lenders and 40 percent of developers were not confident in their process’ security
To compile the data, Rabbet distributes a survey each year to lenders and developers representing a diverse portfolio size. This year’s report captured how survey respondents across the U.S maneuvered the pandemic’s impact to their construction finance process, data management and collaboration. The data from 2021 was then compared to data collected in prior years. This report follows up on trends Rabbet captured in 2020 at the peak of the pandemic and spotlights the effects of the pandemic moving forward.
This year’s report revealed that lenders need better visibility into their portfolios and aim to avoid relying on manual processes to identify risk. 36% of lenders claim they would automate the identification of at-risk projects if they could streamline one aspect of reporting. When asked the same question, 40% of developers claimed they would automate month to month cash projections and forecasting. Both are critical components that often require tedious manual work to report accurately.
The survey revealed flawed methods of collaboration that leave room for error and create a bottleneck in an already time-consuming process. The current construction finance process for both lenders and developers involves collaboration between internal teams and external stakeholders. These communications are challenging because of their reliance on antiquated systems and due to the decentralization of teams that resulted from the pandemic.
“There are substantial inconsistencies between the lender’s and the developer’s perceptions of each other’s process efficiency,” said Will Mitchell, CEO of Rabbet. “The fact that 73% of lenders say that the most time consuming part is finding and fixing errors underscores the fact that the construction finance process needs improvement. Better standardization and implementation of digital processes will benefit everyone across the industry not only to survive, but thrive as we move forward.”
To view the complete 2021 State of Construction Finance Report, click here.
Rabbet provides cloud-based solutions for commercial lenders, real estate developers, and loan monitoring groups to centralize construction finances, automate administrative tasks, and reduce the time spent managing draws. Based in Austin, TX, Rabbet was founded in 2017 and offers visibility and efficiency across billions of dollars in commercial construction projects. For more information about Rabbet, visit www.rabbet.com.