Weather Delays and What Lenders Need to Consider

Bad weather can wreak havoc on construction sites. When a series of storms pass through, it oftentimes results in construction delays. At QuickDraw Fund Control, this year we’ve seen weather delays impact construction progress for up to 90 days, which can be a problem when it comes to the construction loan.

We are in the business of protecting and reducing risk for our clients.

A lengthy weather delay or damage from a storm can result in the following concerns that Lenders need to consider:

1. Additional Costs
A significant weather delay or storm damage can lead to additional costs, not in the original construction loan. Repairs may need to be performed, interest reserve and general conditions costs continue on. Reallocation between line item savings or rebalancing the loan may have to be considered to compensate for unexpected additional costs.

2. Loan Extension
A 60-90 day delay in the build cycle may mean that the bank has to prepare for a loan extension.

The good news is there are some proactive measures that Borrowers can implement, in order to help offset the impact of a weather delay. Here are some tips that will help:

1. Best Management Practices
Make sure the Storm Water Pollution Prevention Plan (SWPPS) Erosion Control & Best Management Practices (BMPs) are in place so to minimize the impact of water to the site.

2. Pump, Pump, Pump

Pumping water offsite into an approved receptacle can be an economical way to dry to soil out faster and get back to building.

3. Communication is key.

Keep in constant contact with your Trade Partners. Subcontractors have been impacted too and will be in high demand, once the weather passes. It’s a standing practice and a good opportunity to “share the pain” with those in the same boat.

Nobody ever wants to deal with a weather delay, but they can and will happen. Both lenders and borrowers can be prepared for how weather affects your construction loans, with some help from QuickDraw Fund Control. For more tips and information about effective fund control methods (with or without any weather delays), contact us today for a no-obligation consultation.

April 19, 2017
QuickDraw Fund Control