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Discussion Starter · #1 ·
I wasn't sure how to title this thread but this should catch your eye.
I signed a customer today for a new home to be built in a month, the homeowner gave me a handwritten note with this on it:
Bank is asking for signed contract,
insurance certificate,
copies of estimates,
subcontractor info,
references,
and two years of my business tax returns!

The homeowner says she has a real problem and is very uncomfortable with the last request.
I haven't had to deal with a bank in a few years so I need your input, is this the norm or are they out in left field?
I don't have any problems providing everything but the last item, I don't feel it's any of their business, I'm not the one borrowing the money.

While we're on the subject of banks, what is the norm for draws?
I know how I want them but as I said, I haven't had to deal with a bank in quite some time.
Thanks,
dave
 

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General Contractor
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Maybe when they saw the new house will be built in a month :eek: they saw a red flag.

With that said, if people plan to take a construction loan out, etc, there is nothing unusual with that request from the bank.
 

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I haven't dealt with banks for some time but guys I know who do the requests you list are fairly normal. The tax return request is more to satisfy them that you are a real legit business that isn't going to flake on them. Talk to them, your references may good enough. You are not the one borrowing the money but it is your responsibility to manage it correctly.

Draws...Go in and talk to the loan officer and discuss how you want it set up. So long as it is a reasonable request most lending institutions will be willing to work with you.
 

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Always Learning
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The only one that sticks out is the tax returns, but I can see the reasoning. The bank wants to know you run a decent business. If you have operated in the red the last few years that would be a red flag to them giving you money. They would worry about proper completion.
 

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I hate banks.

That being said I deal with them on a regular basis building new homes. Some are a pita and want all the information listed- but those are usually the ones that have a simple, easy and "looser" draw system. Once they have vetted you and you become a "approved" builder they will pretty much let you draw what you want when you want.
Some banks will want you to sign an agreement stating that you will allow them to pay subs and suppliers directly. This is what I hate- it's a record keepin nightmare for me- tryin to keep track of who I've paid, how much of a suppliers bill is for what job, etc with out being the one that's writing the checks sucks. It's the banks way of protectin themselves from liens but it pisses me off. Who's the contractor here? Anyway a good friend of mine from here gave me good advice once- "treat banks like mushrooms- feed em shiz and keep em in the dark".
 

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I hate banks.

That being said I deal with them on a regular basis building new homes. Some are a pita and want all the information listed- but those are usually the ones that have a simple, easy and "looser" draw system. Once they have vetted you and you become a "approved" builder they will pretty much let you draw what you want when you want.
Some banks will want you to sign an agreement stating that you will allow them to pay subs and suppliers directly. This is what I hate- it's a record keepin nightmare for me- tryin to keep track of who I've paid, how much of a suppliers bill is for what job, etc with out being the one that's writing the checks sucks. It's the banks way of protectin themselves from liens but it pisses me off. Who's the contractor here? Anyway a good friend of mine from here gave me good advice once- "treat banks like mushrooms- feed em shiz and keep em in the dark".
When they want to pay the suppliers ,how does that work to mark things up? or do you have to add it in somewhere else.
 

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Banks are bullies , when they get to personal thats where I draw the line and threaten to take my business elsewhere . I understand It's your customer dealing with the bank but It's your personal information they want. My cousin is a loan officer at a big bank and always says the banks need you more than they will let onto. If your approved for a loan they will do what it takes to keep you from going elsewhere .
 

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Discussion Starter · #9 ·
Thanks for the replies. I am going to call their contact at the bank and go from there.
And yes, I meant to say we are going to start the house in a month! LOL
 

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I do know there are alot of new rules out there concerning loans. I also know that when a contractor screws up a job, the bank is the one that gets stuck with the problems. If a contractor draws things out too long or if a contractor draws too much money and then stops working.
Talk to the bank, but they will still want all the information. I wouldn't worry about it.
 

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Don't feel too badly.... I get the same questions from a lot of Asset management companies & banks just to perform a $1000.00 job to help a realtor get to closing. Then I might wait 2 months for my check that got escrowed into to HUD for closing.

State license#
City License#
L/L insurance
Company net worth
How long in business
Will any work be from subs
What other asset companies have I done work for
What materials will I be using
How long will the 1 day job take.........etc. etc. etc.


For some banks in my area, it works on a 30-30-30 draw. Last 10 comes after final walk through. I heard others do a 25-25-25........and a 25 after final walk through.
 

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Randy Bush said:
When they want to pay the suppliers ,how does that work to mark things up? or do you have to add it in somewhere else.
The ones that want to pay subs and suppliers direct haven't had a problem cutting 2 checks for a line item in the cost breakdown- 1 for the supplier and 1 to me if the suppliers invoice is less than the line item amount. I've had nosy customers that wanted to see everything and the bank was pretty good about keeping my mark up on the DL. It's still a pita though.
 

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Banksnhave been a lotmtougher the last couple of years. I have had to provide everything noter tombe approved as a contractor for a banks construction loan program, even financials. If you are going to have hundreds of thousands od dollars flow through you, they want to make sure you are solid.
 
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