Draw Request
What is a Draw Request?
A draw request is a formal submission made by a borrower to access funds from a construction or renovation loan. These requests are tied to specific project milestones and ensure that loan funds are disbursed incrementally as work progresses. Draw requests are an essential mechanism for maintaining cash flow during construction while allowing lenders to monitor project progress.
How Draw Requests Work
Draw requests follow a structured process to ensure proper allocation and oversight of loan funds:
- Milestone Verification: Borrowers document completed work associated with a specific phase of the project on the draw schedule, such as site preparation, foundation, or framing.
- Submission of Documentation: Borrowers submit invoices, receipts, and progress reports to support the draw request.
- Inspection: Lenders or third-party inspectors verify that the work has been completed according to the agreed-upon schedule and quality standards.
- Funds Disbursement: Upon approval, the lender releases the requested funds to cover the costs of the completed work.
For the full sequence, from setting the budget during underwriting to the final draw, see our step-by-step guide to the construction loan draw process.
What’s Included in a Draw Request
Draw request forms vary by lender. Some are paper or spreadsheet forms and others are completed in an online portal, but a draw request typically includes:
- Property and loan identifiers: The property address, the borrower or entity name, the loan number and the draw number.
- Line items from the approved budget: Each task or phase from the draw schedule or schedule of values, with its budgeted amount.
- Percent complete: How much of each line item is finished to date.
- Amount requested: The dollar amount for each line item and in total, usually the line item’s budget times its percent complete, minus anything already drawn on that line.
- Supporting photos and invoices: Photos of the completed work and invoices or receipts from contractors and suppliers.
- Lien waivers, where required: Signed waivers from contractors, subcontractors or suppliers confirming payment for earlier work, which protect the property against mechanics liens.
Because most lenders inspect the property before releasing funds, the percentages on a draw request should reflect what an inspector will see on site.
Draw Request Example
Suppose an investor renovating a house with a $50,000 rehab budget submits a first draw request after demolition, the new roof and part of the rough-in work are complete:
| Line item | Budget | Percent complete | Amount requested |
|---|---|---|---|
| Demolition and cleanout | $5,000 | 100% | $5,000 |
| Roof replacement | $12,000 | 100% | $12,000 |
| Electrical rough-in | $8,000 | 50% | $4,000 |
| Plumbing rough-in | $7,000 | 60% | $4,200 |
| Kitchen remodel | $18,000 | 0% | $0 |
| Total | $50,000 | $25,200 |
The request totals $25,200. If the inspector found the plumbing rough-in only 40% complete, that line would be funded at $2,800 instead of $4,200, and the draw would come to $23,800. The difference typically stays in the budget and can be requested once the work is finished. On later draws, each line is requested based on its total percent complete minus what has already been drawn: when the electrical rough-in reaches 100%, the next request for that line is the remaining $4,000.
Benefits of Draw Requests
Draw requests provide several advantages for both borrowers and lenders:
- Controlled Cash Flow: Ensures funds are available as needed, reducing carrying costs and minimizing financial risks.
- Project Oversight: Allows lenders to monitor progress and confirm that the budget and timeline are being followed.
- Risk Mitigation: Incremental funding helps prevent mismanagement or misuse of loan proceeds.
Challenges of Draw Requests
While draw requests are beneficial, they can present certain challenges:
- Delays: Inspection or documentation issues may slow down the disbursement process.
- Administrative Burden: Preparing and submitting the required paperwork can be time-consuming.
- Discrepancies: Incomplete or substandard work may lead to adjustments or rejections of the draw request.
Tips for Successful Draw Requests
To streamline the draw request process, borrowers should:
- Maintain accurate records of expenses, invoices, and progress reports.
- Communicate regularly with contractors to ensure milestones are met on time.
- Request only completed work, using the same line items as the approved draw schedule.
- Work with a lender experienced in construction financing to simplify the approval process.
Draw Requests with LYNK Mortgage
On LYNK Mortgage fix and flip loans and new construction loans, draw requests are submitted in our online portal: you fill in the percentage of completion for each item on your draw schedule, and we schedule an inspection of the property to verify that the requested work is complete. Draws may be submitted only for completed work, not for contractor or materials deposits. Provided there are no issues, most draws are paid within 2–5 business days. For a practical walkthrough, see how to submit a draw request with LYNK Mortgage.