Glossary
Drawdown
Also called: draw, advance
A drawdown is a payment of funds from a loan facility. Construction and refurbishment loans are usually drawn in stages as work progresses, rather than advanced in full at the start.
An example
A developer's facility has a limit sized to the full project, but on day one only the land is funded. Further drawdowns follow each verified progress claim until completion.
Why it matters
Staged drawdowns mean interest is charged only on what has been drawn, but they depend on each stage being verified. Delays in paperwork or inspections can hold up payments to contractors.
Points to check
Ask what conditions must be met before each drawdown, such as a quantity surveyor's report, updated insurance or evidence that earlier stages are paid. Check how long the lender takes to release funds after a claim, because delays can affect your builder's cash flow. Find out whether any drawdown fees apply and whether interest starts on the date funds are released or the date requested.
Try it: Construction drawdown calculator