What is a construction draw schedule?
A construction draw schedule is a detailed plan that outlines when and how loan funds are disbursed throughout the lifecycle of a development project.
Rather than receiving the full loan amount at once, developers are funded in phases, typically tied to project milestones such as grading, foundation, framing, and finishes.
Let’s Get Your Loan Started
Why do draw schedules matter?
Draw schedules matter because they directly affect a project’s cash flow. If funds are delayed, so is construction.
If a schedule is misaligned with actual expenses, it can cause liquidity strain and slow progress. For experienced developers, mastering draw management is a core component of operational success.
Discover your developer funding options: Get started with Marquee Funding Group.
How do draw schedules differ for experienced developer loans?
When lenders work with novice borrowers, they tend to enforce rigid draw schedules with intensive inspections, conservative disbursement thresholds, and substantial holdbacks. This protects the lender but can choke cash flow and delay the project.
Experienced developer loans, by contrast, come with draw schedules that reflect the builder’s proven track record. Marquee, for example, tailors draw schedules with greater flexibility and trust, based on:
- Number of prior completed projects
- Historical completion times
- Consistency of exit execution (sale or refinance)
- Liquidity and contingency reserves
These developers often receive faster approvals, fewer draw conditions, and larger upfront percentages, especially for soft costs like permits, engineering, and pre-construction work.
What are the key components of an optimized draw schedule?
An effective draw schedule doesn’t just follow a timeline; it aligns with real cash needs and construction phases. Core elements include:
- Milestone triggers: Clearly defined events that release funds (e.g., completion of rough plumbing, roofing install)
- Percentage allocations: Loan funds divided based on construction cost estimates per phase
- Documentation requirements: Invoices, lien waivers, photos, and contractor certifications. Maintaining proper business expense documentation also supports tax compliance and project tracking.
- Inspection protocols: Third-party or lender-conducted site reviews before disbursement
- Holdbacks: Small withheld amounts to ensure final completion and avoid liens
For experienced developers, these components are often streamlined. For example, soft costs may be reimbursed with minimal documentation, and hard cost draws may require only progress photos instead of full inspections.
How can developers use draw schedules to manage liquidity risk?
Draw schedules are not just a lender tool; they’re a developer’s financial roadmap. Properly managed, they help prevent capital shortfalls at critical project stages. Techniques include:
- Front-end equity injection: Using developer equity early for land and demo allows quicker access to loan funds
- Reserve forecasting: Aligning reserves with projected draw delays or lender timelines
- Cost spread planning: Ensuring the draw percentage matches actual cost pacing (avoiding gaps between payments and expenses)
- Soft cost timing: Negotiating early draw approvals for architectural, permit, and engineering costs
Experienced developers often structure schedules to maintain at least 60 days of working capital at every phase, buffering for delays in inspections or disbursement approvals.
What do lenders evaluate when approving draw schedules?
From the lender’s side, approving a draw involves balancing risk with project feasibility. Lenders like Marquee assess:
- Project completion percentage: Verified via inspection or third-party confirmation
- Cost-to-complete ratio: Ensuring remaining funds are sufficient for remaining work
- Change order impact: Any modifications to the scope or budget must be addressed
- Contractor capacity: Lenders may verify GC licensing, insurance, and past performance
- Lien protection: Title updates and lien waivers help avoid mechanics lien exposure
The more professional and consistent a developer is in their draw process, the more confident lenders feel, often leading to faster future draw approvals and more lenient initial terms. This includes maintaining professional loan documentation throughout the project lifecycle.
How does Marquee structure draw schedules for experienced developers?
Marquee’s draw schedule methodology is tailored specifically for experienced business entity borrowers, LLCs, and corporations with 3+ completed projects. Our approach includes:
- Customized milestones: Based on the developer’s build process and timeline preferences
- Early soft cost funding: Design, permits, and surveys can be funded upfront when well documented
- Fast-track draw processing: Inspections scheduled within 48 hours, with wire disbursements within 1–2 business days
- Flexible holdbacks: Based on historical performance and scope of work
- Multi-project accommodation: Coordinated draws across a developer’s full pipeline
For developers operating in the $750K–$5M project range, this flexibility can dramatically improve velocity, especially when managing 2–5 simultaneous builds.
What are best practices for managing construction draws at scale?
Experienced developers treat draw schedules as an integrated component of financial and operational planning. Best practices include:
- Centralized tracking: Use draw management software or spreadsheet dashboards to monitor all active projects. Following construction financial management best practices can help ensure compliance and efficiency.
- Timeline alignment: Stagger project start dates so that drawings do not overlap excessively
- Dedicated documentation roles: Assign team members to handle invoices, photos, and inspection coordination
- Lender pre-communication: Notify lenders in advance of expected draw timing to streamline approvals
- Continuous cash flow modeling: Forecast 90-day needs across all projects to ensure coverage
Draw efficiency isn’t just about speed; it’s about strategic deployment of capital. Developers who master draw pacing are able to stretch equity, reinvest earlier profits, and scale without financial strain.
Why optimized draw schedules give experienced developers a competitive edge
For developers running multiple projects, draw schedules are the financial engine of execution. Done well, they keep crews paid, materials flowing, and timelines intact. Done poorly, they cause bottlenecks that delay delivery and damage returns.
Marquee’s experienced developer loans are designed with this reality in mind. Our draw schedules support real-world builder needs, with trust-based systems that reward track record and business professionalism.
Streamline your construction draw process and build with confidence
Apply for financing with Maruee Funding Group now and access capital structures built for scalable execution.