Construction loan monitoring that projects every loan's interest reserve and contingency to the finish
A reserve shortfall seen ten months before the money runs out.
See one case, screen by screen ↓Software that tracks each construction loan between draws: progress against plan, the budget and cost to complete, whether the loan stays in balance, the interest reserve and the lease-up. Construction Loan Monitoring adds six agents that read every site report, schedule update, change-order log and leasing report as it lands and re-forecast the loan to its finish.
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A construction loan is safe while the money left in it can finish the building and the interest reserve can carry the debt until the property pays its own way. Both move between draws. The consultant's site report shows the job falling behind, the contractor's schedule update moves completion, pending change orders pile up against the contingency, pre-leasing lags the plan and the rate curve moves.
Those signals land in emails and PDFs, and the draw-time balancing test sees none of them, because a pending change order or a slipping schedule is not yet in the approved budget. Administrators track dozens of projects in spreadsheets and inspector emails, the credit team hears last, and by the time the next draw shows the overrun the contingency is spent and the options have narrowed.
Estimated split for one construction loan in a month, by hand and with the solution.
Six specialist agents re-forecast every loan when a signal lands; the portfolio manager decides and signs.
Harrow Yard Apartments, 248 units in Charlotte, passed its Draw 16 balancing test on 18 September. Five documents later, here is what happens on Monday 12 October, screen by screen, in the working solution.
Owen opens the S-curves. The rail ranks his 31 construction loans by how far the interest reserve falls short of each project's finish, and Harrow Yard is first. Its curve has bent below plan: 61.4% built against a plan of 68.0%, 6.6 points and $3.34M of work not in place. The gap by trade puts drywall on Levels 3–5 ($1.50M) and the main switchgear ($0.74M) furthest behind.
The agents' forecast: “Interest reserve hits $0 in Aug 2027 · 4 months before the finish · 90% leased Dec 2027.”
Since Draw 16, site report 17, schedule update rev 9, pending change orders 11–13, Ashgrove's letter and Fernhill's leasing report have landed. The agents read each one, re-price the budget, project interest to 90% occupancy, run eight tests and re-score the loan from 55 to 84 — each step shown with what it found and how long it took.
“Balance and covenant tester ran 8 tests · In balance today · forecast out of balance $613,000 at completion.”
Under the S-curve, the interest reserve ($1,835,000 left) and the contingency ($1,026,000 left) run solid to today and dotted to the finish. The reserve hits $0 in August 2027; the finish — 90% leased — is December 2027. The four months between are hatched: $210,000 of interest with nothing to pay it. The contingency runs out in March 2027, $403,000 over with the delay claim.
“short $613,000 at the finish” — while today's test still passes.
Owen sets leasing to 18 a month. The dotted line redraws: the reserve now hits $0 in July 2027, seven months before 90% leased, and the loan is short $793,000. Completion (rev 9, +30 or +60 days) and Term SOFR (3.60% forward or +50 bp) move it the same way. He sets it back to the forecast — the published numbers stay the agents'.
Left in the loan: $25,713,000, equal to the budget remaining — so the loan is in balance today. The forecast cost to complete is $26,326,000. The bridge shows why: pending change orders +$1,148K, the contingency that absorbs them −$1,026K, the delay claim +$281K and interest to 90% occupied +$210K. PCO 11, the switchgear and copper feeders at $612,000, follows a supplier letter citing metals tariffs.
“Today’s draw test compares the left-in-loan bar with the approved budget only — the four steps in between are not in it yet.”
Substantial completion moves from 15 January to 26 March 2027, 70 days late, with 96 days of margin to the 30 June outside date in §5.2. The critical path runs through the switchgear, due 9 February, then permanent power, the elevators and the TCO. The consultant's percentages stay the consultant's; every date cites its page.
Ben Arkwright, site report 17: “Rev 9’s 26 March completion is achievable only if the switchgear date holds; it shows no float on that path.”
The calculator shows the assumptions: completion 26 March 2027, 46 units leased at completion against a plan of 72, 22 leases a month against a plan of 26, Term SOFR 3.60% plus 2.85% = 6.45%. Net operating income starts in April; the reserve runs dry in August; the building reaches 90% occupied — 223 of 248 units — in December.
“The forecaster uses 22 a month — the three comparable buildings average 22.0; the closing plan assumed 26.”
The drafter recommends a balancing notice to Pell Street Partners for $613,000 under §7.3, a recovery schedule from Ashgrove by 23 October with the $281,000 claim held, the watch list at risk rating 4 → 5 (Special Mention), and an extension test set for 14 January 2028. The notice sets out the shortfall in three parts and says Draw 17 will be funded as usual while they talk.
“drafted by the assistant · sent only when you sign”
Owen reviews the four actions and signs. The signature carries its meaning — “I have reviewed the forecast and its sources and approve these actions”. The rating change goes to the Chief Credit Officer, and nothing reaches the borrower until Marcus Delaney sends it.
Lydia approves risk rating 5 (Special Mention), and Harrow Yard goes on the watch list. The decision panel records it: $613,000 forecast out of balance, 24 days before Draw 17 on 5 November, 10 months before the reserve runs dry. The monthly portfolio report for Thursday's credit committee picks up the new rating and the signed notice.
The same loan, seen by the four people at the bank who own it — what their month looked like, and what it looks like now.
Six specialist agents re-forecast every loan when a signal lands; the portfolio manager decides and signs.
Reads the consultant's site reports and the contractor's schedule updates: the certified percent complete against plan, every milestone's baseline and current date, the critical path and the consultant's opinion.
Reads pending change orders, contractor letters and construction cost indices, adds every pending change order and delay claim at the claimed amount, and forecasts each budget line to completion.
Projects draws, interest on the Term SOFR forward curve plus the spread, net operating income in lease-up, the month the reserve runs dry and the interest still needed to stabilisation.
Reads leasing and sales reports against the business plan and pre-leasing covenants: absorption, concessions and comparable lease-ups nearby.
Runs the in-balance forecast, the contingency minimum and the completion, leasing, maturity and extension tests, and reports pass, close or fail with the figure.
Scores each loan from schedule, budget, reserve, leasing and maturity, raises the alert, drafts the recommended actions and the borrower notice, and writes the monthly portfolio report.
Approves actions; the CCO approves ratings. The agents propose; a named person decides.
Ask about any loan, forecast or reserve — or tell it what to draft. Answers cite the site report, schedule, letter or leasing report behind the figures.
Why is Harrow Yard forecast out of balance?
Today the $25,713,000 left in the loan equals the budget remaining, so it is in balance. Four things since Draw 16 are not in the budget yet: pending change orders 11–13 (+$1,148,000), the contingency that absorbs them (−$1,026,000), Ashgrove's 70-day delay claim (+$281,000) and interest the reserve cannot carry to 90% occupancy (+$210,000). Cost to complete is $26,326,000, so the loan is forecast $613,000 short at completion.
What if leasing gets back to the plan, 26 a month?
With 46 leased at completion, the reserve still hits zero in Aug 2027, but 90% occupancy comes in Nov 2027 instead of Dec 2027. The interest it cannot carry falls from $210,000 to $83,000, and the forecast gap from $613,000 to $486,000. The three nearby lease-ups average 22.0 a month, so I would not plan on 26. The scenario is not saved.
Which loans need a decision this week?
Three are high and one is close: Harrow Yard (forecast short $613,000, reserve dry Aug 2027), Saluda Point (reserve short $412,000 before 90% occupancy, Draw 20 on 20 Oct), Kiln Street Lofts (contingency 2.1%, forecast short $710,000) and Wrenfield (58% leased, covenant 70% by 31 Dec).
Draft the balancing notice to Pell Street Partners
Drafted. It cites section 7.3 of the loan agreement — a deposit within 10 business days of the bank's written notice — and sets out the $613,000 in three parts: change orders over the contingency $122,000, the delay claim $281,000 and interest to 90% occupancy $210,000. It asks for a meeting before 23 October and for Ashgrove's recovery schedule. Nothing is sent until you sign and Marcus sends it.
13 screens from the working solution, on its sample data. Pick one to see it large.
The thresholds every loan is forecast and tested against are settings, versioned and on the audit trail.
| Setting | Default | Choose from |
|---|---|---|
| Forecast to — the date the interest reserve must reach | 90% occupancy (stabilisation) | 90% occupancy (stabilisation) · Substantial completion + 6 months · Loan maturity |
| Rate basis for interest after today | Term SOFR forward curve | Term SOFR forward curve · Today's rate held flat · Forward curve + 100 bp stress |
| Pending change orders · contractor delay claims | Counted in the cost to complete · at the claimed amount until settled | On · Off, each |
| Contingency minimum, of hard cost still to be built | 5% | 2% to 10%, in one-point steps |
| Alert when substantial completion moves by more than | 30 days | 14 · 30 · 45 · 60 days |
| Alert when the reserve will not reach the forecast date plus | 60 days | 30 · 60 · 90 days |
| Alert when leases or sales trail the plan by | 15% | 10 · 15 · 25% |
| Who approves actions and notices · rating changes | Portfolio manager · Chief Credit Officer | Portfolio manager · Portfolio manager + lending officer — ratings: Lydia Fernsby, Chief Credit Officer · Credit committee |
Every figure is labelled: a target the solution is built to, an estimate, a typical published result, or a proven one.
“demo” = seen in the working solution, on its sample portfolio · “target” = the design goal, measured in the live solution · “estimated” = our estimate · “typical” = published figures (State of Construction Scheduling 2025 — 76% of 70,000+ schedules finished later than baseline). People, companies, banks and projects named on this page are fictional — characters and sample data in the working solution.
Software that tracks each construction loan between draws: progress against plan, the budget and cost to complete, whether the loan stays in balance, the interest reserve and the lease-up. Construction Loan Monitoring adds six agents that read every site report, schedule update, change-order log and leasing report as it lands and re-forecast the loan to its finish.
The interest reserve forecaster projects draws, interest on the Term SOFR forward curve plus the loan's spread, and net operating income as units lease, month by month to the date the reserve must reach — 90% occupancy by default. It reports the month the reserve runs dry and the interest it cannot carry, and shows every assumption.
It counts what the draw-time test cannot see yet: pending change orders and contractor delay claims at the claimed amount, and the interest the reserve cannot carry to stabilisation. In the working solution, Harrow Yard is in balance today and forecast $613,000 short at completion.
No. The agents never change loan terms, the rate, a risk rating or a percentage the consultant certified, never approve a change order and never declare a default. They forecast and recommend.
Yes. The portfolio manager approves the actions and signs any borrower notice, a risk rating change needs the Chief Credit Officer's approval, and only the relationship officer contacts the sponsor. Every agent step and every approval is on the activity trail.
The loan agreement and approved budget, the consultant's site reports, the contractor's schedule updates and change-order logs, leasing and sales reports, construction cost indices and the rate curve. The signals read are switched on or off in Settings.
Yes. The forecast date, rate basis, contingency minimum, schedule-slip, reserve-runway and leasing alerts, risk bands and approvers are all settings, and every change is versioned and on the audit trail.
The Agentic Solution Engine builds and deploys it from your requirements — your credit policy, loan agreements, budgets and a sample of site reports and draws — and it goes live once every quality gate has passed. We will walk you through it on your own loans first.
Eighteen months of maturities ranked by refinance gap, evidence attached.
1-min demoConstruction Draw ManagementDraws funded in a day, not a week, every line tied to its invoice, waivers and inspection.
1-min demoRent Roll & Operating Statement AnalysisNo re-keying, and every rent checked against its lease.
1-min demoWe'll run Construction Loan Monitoring on a sample of your own loans, site reports and draws.