In a recent discussion with Brian Bailey, Commercial Real Estate (CRE) expert at the Federal Reserve Bank of Atlanta, we explored the current economic landscape, its effects on lending, and critical factors influencing the commercial real estate sector. Bailey offered insights into today’s resilient but evolving market and practical steps lenders should consider in navigating this environment.

Watch the YouTube Video: https://www.youtube.com/watch?v=CueBgKt3lnQ

Welcome back to another insightful episode of the Smarter Lending Podcast! A second part of our series on SBA (Small Business Administration) Construction Lending, featuring experts Nick Jellum, Michele Walters, and Trevor Richardson covered a wide range of essential topics, from pre-construction due diligence to managing disbursements and ensuring the proper use of lien waivers.

Key Takeaways from the Episode

1. Thorough Pre-Construction Analysis Trevor emphasized the importance of a comprehensive pre-construction analysis. This step is critical for identifying potential issues in the drawings, budget, and contract before construction begins. By addressing these concerns early, lenders can mitigate risks and set the stage for a successful project.

2. Effective Management of Disbursements Michele and Trevor shared best practices for managing disbursements during the construction phase. Monthly disbursements using AIA Applications for Payment and physical onsite inspections ensure that the project's progress is accurately tracked, and funds are appropriately allocated.

3. The Critical Role of Lien Waivers Lien waivers are essential for protecting the project against outside liens and ensuring that funds are distributed to the right parties. Both conditional and unconditional lien waivers should be collected and properly filed to maintain legal protections and financial clarity.

4. Proactive Monitoring and Communication Keeping the project on schedule and within budget requires constant communication between all parties involved. Trevor highlighted the need for accurate Applications for Payment and a diligent review process to ensure that disbursement requests are justified and properly documented.

5. Addressing Common Issues From over-budget construction to seasonal delays, Michele stressed the importance of having tough conversations early with borrowers and contractors. By addressing potential shortfalls as soon as they arise, lenders can prevent project delays and financial complications.

Welcome to the latest edition of our Smarter Lending Podcast, where we delve into the complexities of distressed properties—a pressing issue in the commercial real estate sector. Hosted by Liz Mahoney, we tackled this challenging topic with expert insights from Noelle McDonald, VP of Valuation Services at LCS, and Aaron Fehnel, VP Loan Workout Manager at Tompkins Bank.