How Construction Loan Draws Work: Schedules, Inspections & Getting Paid Fast

Published July 2026 · By the SLA Capital team

On a construction or heavy-rehab loan, you don't get the whole budget at closing. You get it in draws — staged disbursements released as the work gets done. The draw process is where good projects keep momentum and bad lender relationships fall apart, so it's worth understanding before you sign a term sheet.

Why lenders fund in stages

The construction budget is the riskiest money in the deal — it's being lent against work that doesn't exist yet. Draws solve that: the lender only releases funds against completed, verified work, so the loan balance always tracks the actual value on the ground. It protects the lender from an abandoned half-built project, and it protects you from a contractor who's been paid for framing that hasn't started.

The draw schedule

At closing, your approved budget gets broken into line items — typically matching the natural phases of the build:

• Site work and foundation
• Framing and roof (dry-in)
• Mechanicals — plumbing, electrical, HVAC rough-in
• Drywall and interior finishes
• Final — flooring, fixtures, punch list, certificate of occupancy

Each line has a dollar value from your budget. You draw against lines as they complete — you don't have to wait for a whole phase, and most lenders will fund partial completion ("framing 60% done") based on the inspector's percent-complete call.

The draw cycle: request → inspect → fund

1. Request. You (or your GC) submit a draw request listing the line items completed since the last draw, usually with invoices and photos through the lender's draw portal.

2. Inspect. The lender orders an inspection to verify percent complete. Modern lenders use app-based inspections — a walkthrough with timestamped photos — that turn around in a day or two, versus the week-plus wait for a traditional site visit to get scheduled.

3. Fund. Once the inspection confirms the work, funds are wired — on a well-run file, within a few business days of the request. Title may be updated between draws on larger projects to confirm no mechanic's liens have been recorded.

That cycle repeats — typically 4–7 draws on a ground-up build, 2–4 on a rehab — until the budget is exhausted and the project is complete.

What slows draws down (and how to avoid it)

• Draw requests that don't match the budget. If you're moving money between line items — spending less on flooring, more on framing lumber — flag the reallocation to the lender first rather than submitting numbers that don't reconcile.
• Missing lien waivers. Many lenders require conditional lien waivers from subs for prior-draw work. Collect them as you pay, not in a scramble at request time.
• Work ahead of permits. An inspector who sees rough-in work with no permit posted will hold the draw. Keep the paper on site.
• Radio silence. The fastest files are the ones where the lender already knows what's coming. A photo update between draws costs nothing and builds the trust that speeds up the next release.

Interest: drawn balance vs. full commitment

A term worth checking on any construction loan: whether interest accrues on the drawn balance only or the full loan commitment from day one. On drawn-balance loans — the standard among competitive private lenders — a $1M budget you've drawn $200K against accrues interest on $200K. That difference compounds over an 18-month build; make sure it's in the term sheet.

How SLA Capital runs draws

Our New Construction program funds land plus vertical build at up to 85% LTC, with 18 or 24 month terms matched to your build schedule and straightforward extensions on active projects. Draws run through a dedicated online portal with app-based inspections — request, photo walkthrough, wire. Fix & Flip rehab budgets work the same way. Loans from $100K to $7.5M in 42 states.