How Construction Draws Work (And How to Get Funded Faster)

If your loan includes rehab or construction funds, you will not receive that money at closing. It is held back and released in stages, called draws, as work is completed. Draws are where many projects slow down, and almost every delay can be avoided. Here is how the process works and how to keep your cash moving.

What a draw is

A draw is a reimbursement for completed work. You or your contractor pay for a phase of the project, then request that the lender release the matching portion of the rehab holdback. The lender verifies the work is done and wires the funds.

This protects both sides. You get funding tied to real progress, and the lender knows the money is going into the property that secures the loan.

The draw process, step by step

1. Complete a phase of work. Draws are based on the line items in your approved budget. Finish the work on the lines you plan to request.
2. Submit a draw request. List the line items and amounts you are requesting, with photos of the completed work. Include invoices or receipts if your lender asks for them.
3. Inspection. An inspector visits the property, or reviews photos and video for smaller draws, to confirm the work matches the request.
4. Review and approval. The lender compares the inspection to the budget and approves the amount supported by completed work.
5. Funding. Approved funds are wired to you or your contractor, minus any draw or inspection fees.

At PK, inspections are done virtually through photos and video or by an inspector on site, depending on the size and stage of the draw. Most draws are funded within 2 to 3 business days of the request.

Why draws get delayed

These are the issues we see most often:

• Work is not finished. Requesting payment for a line item that is 80% complete usually means a partial approval and another inspection later.
• Requests do not match the budget. A draw request should use the same line items as your approved budget. A request that says "kitchen and misc." will slow things down.
• Missing photos. Clear, dated photos of each line item speed up review.
• No access for the inspector. If the inspector cannot get into the property, the clock stops.
• Budget changes without approval. Moving money between line items is often fine, but it needs to be requested and approved before the draw, not during it.

How to get funded faster

• Plan your first phase with your own cash. Draws reimburse completed work, so you need enough liquidity to fund the first stage. Build that into your plan before closing.
• Batch your requests. Fewer, larger draws at logical milestones (demo and rough-ins, then drywall and finishes) move faster than frequent small ones.
• Take photos as you go. Wide shots of each room plus close-ups of new work make inspections quick.
• Keep your contractor in the loop. Your GC should know the draw schedule so their work lines up with your funding.
• Communicate early. If you find a problem behind the walls, tell us before the next draw. We would rather solve it with you than discover it at inspection.

Why this matters for your next deal

A smooth draw history makes you a stronger borrower. It shows you manage budgets and timelines well, which can lead to better terms on future loans. Keep a simple log of each draw with the date requested, the amount, and the date funded.

At PK, our team includes construction professionals who understand job sites. When a draw question comes up, you are talking to someone who knows what a rough-in inspection looks like.

Questions about a draw?

If you are planning a project with a construction budget, reach out before closing. We will walk you through our draw process so you know exactly how and when your funds will be released.