The draw process every construction sponsor has to learn.

Every construction draw starts with a pay application from the general contractor – typically the AIA G702/G703 form or a lender-specific equivalent – and a sworn statement listing all subcontractors, their contract amounts, amounts paid to date, and the current draw request per line. The sworn statement is not a formality. It’s the document that establishes lien-waiver coverage: if the GC certifies payment to a subcontractor who has not provided a lien waiver, that subcontractor retains lien rights against the property for the unpaid amount. On a complex multifamily project with 40 subcontractors, chasing lien waivers to match the sworn statement is where the draw package takes two days to assemble.

Retainage is the portion of each draw the lender withholds as completion insurance – standard terms hold back 10% of each draw until the project reaches 50% complete, then reduce to 5% for the back half. Retainage creates a cash-timing problem for GCs: they’re carrying 10% of early-draw amounts in receivables while paying subs on full contract. On a $30 million hard-cost project, the retainage balance at 50% complete is $1.5 million. The brief documents the practitioner positions on negotiating retainage schedules at loan closing – not during construction, when the lender has no incentive to move.

The third-party inspector is the lender’s eyes on site. The inspector visits, measures percent complete against the project schedule, verifies installed quantities against the G703 line items, and produces a report that the lender’s construction administration team uses to approve or cut the draw. The relationship turns adversarial in two predictable situations: stored materials and change orders. Stored materials – structural steel, MEP equipment, curtain wall panels – can represent large draw amounts before installation, and inspectors who can’t verify on-site condition will recommend a cut or require a bonded warehouse certificate. Change orders that haven’t received prior lender approval will be excluded from the draw regardless of whether they’re already in the ground. The sponsor who gets the change order approved before execution avoids a draw dispute; the one who doesn’t funds the overage out of equity.

The real draw timeline: lenders quote five to seven business days from complete package submission to funding. The brief documents the actual distribution – mean closer to 14 days, with the 90th percentile at 30 – and maps where the time goes at each stage.