Disclaimer: How Tech for Lenders Can Reduce Risk and Increase ROI is a guest contribution and is for informational purposes only. It is not written by a licensed attorney and should not be relied on as legal advice. For guidance on your specific situation, please consult a qualified legal professional.
Private lending in construction has always been a balancing act. The potential returns are attractive, but risks such as project delays, cost overruns, borrower mismanagement, and incomplete documentation can quickly erode those profits. For decades, lenders have relied on manual processes and never-ending email threads to manage these risks. Although technology has transformed nearly every other financial sector, construction lending has remained surprisingly analog.
The question facing private lenders today is not if they should adopt new technology, but rather what technologies will move the needle on risk mitigation and return on investment. The answer lies in understanding where the greatest vulnerabilities exist in construction lending and how purpose-built tools can address them.
The Hidden Costs of Manual Processes
Before exploring tech solutions, it’s worth quantifying the problem. Manual draw management and project monitoring create multiple layers of inefficiency. Loan managers spend hours reviewing draw requests, cross-referencing invoices, and coordinating inspections. Borrowers become frustrated with slow funding timelines, which can strain relationships and delay projects. These fragmented processes and lack of visibility between parties leave room for further disconnect. Most critically, the lag time between when issues emerge on-site and when lenders become aware of them create windows for problems to compound.
Consider a typical scenario: a borrower submits a draw request with supporting documentation. The lender reviews the paperwork, schedules an inspection for the following week, waits for the inspector’s report, and then processes the funds. This cycle can take two to three weeks, during which contractors wait for payment and project momentum stalls. Multiply this across a portfolio of 10 or 20 active construction loans, and the administrative burden becomes substantial, resulting in a much higher risk of human error.
Real-Time Visibility: The Foundation of Risk Reduction
The most significant risk mitigation benefit technology offers is real-time project visibility. When lenders can access current project status, budget tracking, and documentation on demand, they shift from reactive to proactive management. Problems that might have festered for weeks, such as a subcontractor lien risk or budget overruns in a specific trade, become visible almost immediately.
Modern platforms enable borrowers to upload progress photos, receipts, and lien waivers in real-time, creating a continuous documentation trail rather than periodic snapshots. This transparency serves both parties: borrowers demonstrate progress and maintain trust, while lenders can identify red flags early enough to intervene if needed.
This visibility also completely transforms the inspection process. Rather than relying solely on scheduled site visits, lenders can supplement physical inspections with photo documentation, video walkthroughs, and digital verification tools. Virtual inspections are another more recent technological development, and a viable option for many projects. The result is more frequent monitoring at a lower cost per touch point.
Many platforms are integrated with third-party inspection companies, which brings scheduling, reports, and statuses all within the same management software, significantly reducing the time and manual effort required by other means.
Automated Workflows and Faster Draw Cycles
Speed and accuracy matter in construction lending, not just for borrower satisfaction but also for risk management. Slow draw processing can push contractors to file liens or cause borrowers to seek expensive bridge financing. Technology platforms that automate draw request workflows from submission through review, to funding, can compress multi-week cycles into days or even hours for straightforward draws.
Automation doesn’t mean removing human judgment from the process. Rather, it means eliminating redundant data entry, automatically flagging incomplete documentation, and routing requests through standardized approval workflows. Loan officers spend less time on administrative tasks and more time on high-value analysis and relationship management.
Platforms like Sekady, designed specifically for construction lenders, illustrate how purpose-built technology addresses these challenges. By centralizing project documentation, automating draw workflows, and providing real-time budget tracking, such tools help lenders scale their portfolios without proportionally scaling their operational overhead.
Data-Driven Portfolio Management
Beyond individual loan management, technology enables portfolio-level insights that were previously impossible to capture. Which project types consistently experience delays? Which borrower behaviors correlate with successful outcomes? How do different inspection frequencies impact default rates?
Aggregated data from multiple loans reveal patterns that can inform underwriting criteria, pricing models, and risk management protocols. Lenders who leverage this intelligence can make more informed decisions about which loans to pursue and how to structure them.
The ROI Calculation on Tech for Lenders
The return on investment from lending technology manifests in three ways: reduced operational costs, decreased default rates, and increased portfolio capacity. When loan officers can manage more loans without sacrificing oversight quality, the fixed cost per loan decreases. When early warning systems prevent small issues from becoming defaults, loss rates decline. And when draw cycles accelerate and borrower experience improves, lenders can attract higher-quality deals.
For most private lenders, these benefits can be realized with relatively modest investment into tech for lenders, especially when compared to the cost of a single defaulted construction loan.
Moving Forward
The private construction lending landscape is evolving, and borrower expectations for technological sophistication from lenders will only increase. Lenders who embrace purpose-built technology position themselves to scale more efficiently, manage risk more effectively, and ultimately deliver better returns.
The key is selecting technology that addresses construction lending’s unique challenges rather than attempting to retrofit generic loan management systems. When technology is purpose-built for the construction lending workflow, it becomes not just a tool but a competitive advantage.
About the Author
Thayne Boren is a veteran in the software and technology space with over 20 years of experience in the FinTech, ConTech, and LogiTech spaces. Boren has led numerous product and sales organizations from start-up to exits. His guidance and input were key in the exit of a top transportation and logistics technology company in 2018, of over $1.2 billion. His experience in executive leadership ranges from product, partnerships, and presidency roles. Boren now leads Sekady as the company transforms the FinTech space in title, construction, and CRE lending.
