Pub. 8 2020 Issue 3

ISSUE 3. 2020 13 borrower separately to see if there are gaps in expectations and pricing. Accessing databases of construction costs will give you financial insight into understanding the project before it begins. CONTRACTOR REVIEW Not all contractors are the same. Appearance is not always what it seems. Most commonly we see lenders verify finances and reputation to determine contractor strength. This is good, but often doesn’t tell the whole story. Something that will be truly telling is contacting subcontractors that do and don’t work for the contractor. Generally, subs know every contractor and can give you additional insight into their reputation. Another resource is your local general contractor associations like the HBA and AGC. They typically have great information about contractors who are or aren’t members. LIEN WAIVERS We have yet to find a FI that manages this aspect of construc- tion to perfection, and frankly this puts a ton of construction lending at risk. The next downturn will expose the lenders that didn’t take liens seriously. It is not easy. It also can be a point of friction between you and your contractor. If you can be thor- ough while also making this part of your contractors job easy, you have hit the jackpot. PAYMENT Recently the state of Florida was defrauded by a scammer that was able to send their wiring instructions to the government Mike Lacey co-founded CoFi after a 12 year career in con- struction. He has a Construction Management degree from BYU, has started several businesses, and most recently sold his residential construction company to focus solely on CoFi. He loves to spend time with his family in the great outdoors and play basketball in the early mornings. via email. Tens of millions of dollars were sent to the scammer rather than the contractor. Payments via check have their own problems. Matching checks to invoices is problematic and are frequently mismatched. This leads to heavy call volume, im- proper lien filings, and reconciliation between all stakeholders. Fortunately the solution for payments is fairly simple. Detailed communication accompanied with each check and validated business addresses will solve most of the problems with checks. When wiring or sending ACH payments, getting the informa- tion from a reliable source, double checking with a call, written document, or trusted software protects you from payment fraud. REWARDS: PEACE OF MIND AND GROWTH With a simple yet capable system for construction lending you can rest easy that your FI is prepared for any downturn, and has the ability to scale your construction pipeline. We have seen that lenders who take the time to create proper systems actually take less time to process payments, and issue new loans. We have also seen that creating these systems also helps their clients be better at their jobs and keeps them coming back to the FI. Best systems = decreased risk, increased efficiency, and organic growth. n For more information: BLUFUND@UTCNS.COM | (801) 316-9114 BUSINESS LOANS OF UTAH blufund.com BLU is a business loan fund founded by UCNS and local governments to provide financing to businesses who don’t qualify for loans from traditional sources. Loans range from $50,000 to $350,000 Creating Jobs, Providing Housing, Giving Hope