Whether you are the lender, developer, or equity partner on a project, tracking the source of funds for each draw request is critical. This article explains how to setup the overall project funding sources. Configuring this information makes the funds tracking within each draw very efficient and transparent.
Basic Funding Source Configuration
When you create a new project in Rabbet, you will be prompted to setup the funding sources after inputting the budget. If the funding information is not yet available, you can also bypass this step during the project creation flow by simply clicking 'Next'.
If the funding source configuration information is not available at the time of project creation, or if the information needs to be later updated, navigate to the 'Project Settings' tab. Expand the 'Funding Sources' drop down menu.
Click 'Add Funding Source' to get started or edit the existing funding sources if they have been previously created. The fields that need to be completed for each funding source are:
Name: A unique identifier to describe the funding source
Organization: Source of the funds
Amount: $ amount of the funding source
Type: Debt or Equity
Troubleshooting - the total funding source amounts must equal the total budget to successfully save the funding source configuration. If the total funding sources for the project aren't yet known, utilize a "placeholder" entry to cover the balance.
Create a new organization when adding a funding source if the organization does not appear in the drop down menu.
Click 'Save Changes' when all updates have been made.
Auto Allocate Funds on Draw
Toggle ON the 'Auto allocate funds on draw' button. When this feature is activated, Rabbet adds an 'Order' menu for each funding source.
Click on the 'Order' drop down menu to set the funding automation that will occur for each draw.
Move To: choose the ordering in which sources, relative to each other, will fund draws throughout the project.
Pari Passu With: choose this option if multiple sources are to be applied at the same time and proportionally to the total remaining amount of those funding sources. There is no maximum amount of funding sources that can be Pari Passu.
Delete Funding Source: delete a previously created funding source.
Select 'Split Group' that have previously been grouped in Pari Passu. Selecting 'Delete Group' completely removes all of the funding sources within the group.
Set Uses of Funds
Toggle ON the 'Set Uses of Funds' button. When this feature is activated, the project's budget divisions and line items will display below the funding sources.
To restrict a funding source from applying to a particular line item or division, uncheck that item. In the example below, the Secondary Bank Loan CANNOT be used to fund any draw request on the 'Land' budget line item
Tip from Customer Success - always utilize the auto allocate feature whenever uses of funds is restricted. This will utilize maximum automation so that Rabbet calculates the funding from each source within any draw.
Check out the article on managing funding sources and uses in a draw to learn how these settings come to life.
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