During loan origination, each Borrower must submit a detailed budget for their project. This budget must be in BC’s preferred format, which is provided to the Borrower as easy-to-complete Excel files. Borrowers often already have their budget prepared in their own format, however using the BC format is required because it is configured to upload directly into BC’s Loan Management System (LMS). BC provides two basic budget formats; one for horizontal or development work (i.e., work outside of the foundation of a structure), and one for vertical or construction work (i.e., work from the foundation to the roof). For projects involving both horizontal and vertical work, Borrowers must segregate their costs between the two budget formats. For projects involving multiple units or properties, Borrowers may consolidate all the horizontal costs on one budget template but must provide a separate vertical budget for each discrete foundation.
Once submitted, budgets are carefully reviewed by the Loan Officer, Transaction Coordinator, and Credit Officer, looking for red flags, feasibility, hidden costs, or potential errors. Any discrepancies are referred to the Borrower for correction. For larger or more unique loans, the budget is sent to a 3rd party inspection company for independent review and validation prior to approval.
When approved, the budget(s) become the basis for the approved loan amount, along with any purchase or refinance costs and other fees incurred in originating the loan. Approved budgets are then loaded into LMS and become the basis for all future construction draws. Borrowers will be allowed to draw against each line-item on the budget up to the approved amount. Any fund requests greater than the approved line-item amount require approval by a manager and may require a modification to the loan terms. Managers have a limited amount of authority to move funds from one line-item to another, with clear justification from the Borrower, without increasing the overall approved loan amount.