How to Use Lender Compliance Software
We're always trying to find ways to make your life easier. Our latest achievement? Simplifying the lender reporting process. The process of adjusting NOI to the lender's requirements is so complicated that automating it was deemed impossible by many. Until now — we created a hack for you, making it easier for you to stay in compliance.
What is Lender Compliance Software?
As the first, it's difficult to completely define what lender compliance software should be. In general, lender compliance software is a technological solution for commercial real estate professionals that helps them with lender covenant tracking so that they are able to stay in compliance.
At LoanBoss, we approached this by creating software to automate the process of calculating lender-adjusted definitions for DSCR and Debt Yield. It's a fully customizable solution that will reduce the time and effort of your lender reporting processes.
We've also created a dashboard to make it easier to manage your reporting requirements! Everything is ready for you to review and approve before you send your lenders what they need.
How The LoanBoss Lender Compliance Feature Works
There are 3 stages to our process.
Stage 1 - Property Financials
We integrate with your property management software to feed your most recent property financials into the LoanBoss platform so it's always up to date and accurate. They're saved as source files and are always ready for you to reference.
Stage 2 - Automated & Fully Customizable
Set up your custom debt covenant adjustments by configuring your calculations once — they will run automatically going forward. No matter how nuanced your NOI or Debt Service definitions are, there is a field for you!
Stage 3 - Show and Tell
Instantly pull current, lender-adjusted DSCR and Debt Yield calculations that are customized to each deal. The math and the proof are available for you to review, approve, and download before you send it off to the lender.
Want to see it live? Request a demo!
Behind the Scenes
Our integration with your property management software allows us to receive your reports/property financials automatically. They're sent at a scheduled time (monthly, quarterly, or whenever you close your books). When we get your 12-month trailing and projected cashflows and balance sheet reports, the information will automatically ingest the data and map it to the correct deal.
Then it's time to set up the actual calculations.
To adjust your NOI or Debt Service, you first have to create fields for your report — you have a few options:
- Hard Coded. These are manually inputted values that you "hard code" into the system. These are great for any numbers that we don't have abstracted in LoanBoss or that aren't found in the financials you mapped over earlier (e.g. % occupancy for offices in a certain city).
- From the Files. One of our favorites — all you have to do is click and drag to highlight the line items you need directly from your financial reports.
- Derived from LoanBoss. This is data that has been abstracted into your LoanBoss account (loan amount, square footage, units, etc.) by our abstract team. Typically these are used to create calculated fields for adjustments such as reserves.
- Calculated. Calculated fields are a modification of other previously made fields. You can either combine previous fields and/or hard code a value to alter them. For example, if you need to use 4% of your management fees in a line item, you're able to hard code the "management fees" field you created From the Files and and multiply it by .04 for your adjustment.
Once you've created your fields, you can start using them to make your adjustments. Does your definition call for you to pull the "greater/lesser of" two fields? We can do that! LoanBoss is as nuanced as your adjustments. You're able to modify each line item of your definition for increased flexibility!
Make adjustments for each property one time.
Once your line items are established, LoanBoss will automatically spit out your DSCR and/or Debt Yield calculation! Every reporting period.
We believe in showing your work so each report contains a summary of your DSCR/DY calculation as well as a detailed explanation of how we got there (your line items and adjustments).
We made sure that you have all the tools you need to properly adjust your calculations so that your lender-defined DSCR and Debt Yield are correct — no matter how nuanced. Stop poring through docs every reporting period for your NOI and Debt Service definitions and stop living out of excel to run your lender-adjusted DSCR or Debt Yield calculations.
The final product, the report, is then ready for you to download, review, and approve before sending off to your lenders.
Let software deal with the boring, repetitive parts of lender reporting and take away some of the stress — it'll be our little secret.
To learn more, check out the following resources:
Email us at theboss@loanboss.com with any other questions.