Evaluating Construction Contractor Lending Risk

Lending to construction contractors is risky business, but this live webinar will show you how to evaluate that risk using the contract status report.  The construction industry accounts for 10 to 20% of a local economy, so extending credit thoughtfully to this sector benefits both your organization and the market you serve.  A Contract Status Report outlines the current state of contracts within a construction project. It provides a snapshot of the progress, potential risks, and financial implications of each contract. This report serves as a vital tool for project managers, stakeholders, and team members to assess the health of the project and make informed decisions. With a few items from the financial statements, you can use the contract status report to calculate a contractor’s cash flow repayment ability.

Topics covered in this session

• Percentage of Completion vs completed contract accounting
• Contractor status report and key elements in contractor accounting and financial statements
• Progress billings--retention and collateral value
• Jobs in progress vs completed jobs
• Total contract revenue, change orders, % of completion, billings to date
• Revenues earned, cost of revenues, gross profit
• Total estimated costs, costs to date, estimated costs to complete
• Billings, underbillings and overbillings
• Deferred income taxes
• Evaluating contractor downside and most likely cash flow for repayment ability based on contract status report
• Useful conditions and covenants in contractor loan underwriting

Who Should Attend

• Commercial bankers
• Commercial real estate lenders
• Credit analysts
• Credit department staff
• Loan underwriters
• Loan review officers
• Credit department managers
• Senior lenders
• Chief credit officers