We are doing a construction loan and it was determined that the building will be in a flood zone. What should the borrower be providing us from the insurance company so that we can close the loan?

A declaration page or an application with proof of payment. The same as with any other loan.

If the proof of payment is not on the same day as the flood application, the effective date for our purposes would be the proof of payment date correct?

I would be first looking at the application to see what date it is effective dated. For example, if construction is not schedule to start for 30-days, it could be effective anytime prior that date.

The borrowers insurance company will not even take his money until the foundation is in.

Tell them to find a new insurance agent. The insurance agent has no idea what they are doing:

21. Is a building in the course of construction that is located in an SFHA in which flood insurance is available under the Act eligible for coverage under an NFIP policy?

Answer: Yes. FEMA’s Flood Insurance Manual, under general rules, states:

Buildings in the course of construction that have yet to be walled and roofed are eligible for coverage except when construction has been halted for more than 90 days and/or if the lowest floor used for rating purposes is below the Base Flood Elevation (BFE). Materials or supplies intended for use in such construction, alteration, or repair are not insurable unless they are contained within an enclosed building on the premises or adjacent to the premises. [FEMA, Flood Insurance Manual at p. GR 4 (FEMA’s Flood Insurance Manual is updated every six months).]

The definition section of the Flood Insurance Manual defines “start of construction” in the case of new construction as “either the first placement of permanent construction of a building on site, such as the pouring of a slab or footing, the installation of piles, the construction of columns, or any work beyond the stage of excavation; or the placement of a manufactured (mobile) home on a foundation.” [FEMA, Flood Insurance Manual, at p. DEF 9.] While an NFIP policy may be purchased prior to the start of construction, as a practical matter, coverage under an NFIP policy is not effective until actual construction commences or when materials or supplies intended for use in such construction, alteration, or repair are contained in an enclosed building on the premises or adjacent to the premises.

That is my thought as well, thanks for the help!