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Construction Lending – Administering and Monitoring Commercial Construction Loans-Sp24


Additional information



Recording Available Until



Richard Hamm


Advantage Consulting & Training

Target Audience

commercial lenders, credit analysts and support staff that deal directly with commercial construction loans; mortgage bankers, lending managers and credit officers indirectly involved in the construction lending process, loan review specialists, private bankers, small business lenders, special assets officers

Program Time

10:30 am-12:00 pm CT


90 minutes

The 2008-2009 downturn in commercial real estate (CRE) exposed many weaknesses in bank construction lending practices. This was due, in part, to banks attempting to utilize versions of their residential forms and policies to administer commercial construction loans. Such an approach generally does not adequately control the situation due to many important differences between residential and commercial projects. This program covers the important steps involved in effectively administering commercial construction loans, including common errors to avoid.

Topics to be covered:

• Differences between residential and commercial construction loans
• Factors to consider in gauging the level of risk involved in the project/loan
• Key issues with construction contracts, budgets and the interest reserve
• Items that determine how you handle a specific loan

– The level of construction risk
– The type of commercial construction situations (new construction, repair/renovation, etc.)
– The loan approval and related conditions or contingencies
– The commitment letter or term sheet written to the customer
– Your bank’s policies and procedures
– The construction loan agreement
– Adjustments as the project unfolds

• Tips for other documentation: Surveys, title insurance and bonding
• Funding controls: Inspections, lien waivers and disbursement methods
• Completion of the project and stabilization (if applicable)