📘 What is a Construction Draw Schedule?

A Construction Draw Schedule is a detailed timeline that outlines when loan disbursements (draws) are released to fund specific stages of a building project. It breaks down the project into phases, such as foundation, framing, roofing, and finishing, and aligns payments with verified progress.

This schedule helps keep the project financially on track and ensures accountability between lenders, developers, and contractors.

📌 When and Why It’s Used

Construction draw schedules are used in real estate development and fix-and-flip projects where financing is released incrementally. Lenders use the schedule to control risk and prevent overfunding before work is completed.

Developers rely on it to coordinate budgets, timelines, and contractor payments. It's especially critical for large or multi-phase builds

🧮 How It’s Calculated or Applied

A draw schedule is created during the planning phase, typically with input from the builder, lender, and project manager. It allocates a percentage of the total budget to each phase of construction, with funds released after inspection and approval.

Each draw request must be supported by documentation, such as photos, invoices, or third-party inspections. The process helps track both spending and progress.

Lenders may also include retainage—holding back a portion of funds until final completion—to further ensure project delivery.

✅ Pros

• Provides structured funding aligned with real progress
• Reduces lender risk and improves project oversight
• Encourages timely contractor performance and documentation

⚠️ Cons

• Can delay cash flow if inspections or approvals are slow
• Adds administrative overhead to the financing process
• May create tension if payment timing misaligns with contractor needs