Lenders who offer construction loans know there is a high risk involved in completing a project on time and on budget. Most lenders have a plan to mitigate this risk during their pre-closing due diligence, and one of those things is thoroughly vetting the contractor before a construction loan is closed. This contractor acceptance process includes gathering references and then contacting each reference to verify. Important information to gather is the client’s financial, client, and trade references.
The below infographic contains specific points to gather, and then subsequent warnings or go-aheads based on the results gathered. Find out information about:
- What to look for when checking a contractor’s financial history regarding:
Credit history
Payment history
Credit consistency
Business credit - What to look for when checking a contractor’s client references regarding:
Recent projects
Project budgets
Project scale
Client feedback - What to look for when checking the contractor’s trade references regarding:
Subcontractors
Liquidity
Suppliers
Project scale
Knowing what to look for when gathering the contractor’s references will help expedite the contractor acceptance process and mitigate risk.
