Managing a construction project efficiently depends on more than just skilled crews and blueprints — it hinges on streamlined project finances. When loan draw requests are delayed, subcontractors wait for payment, suppliers hold back materials, and projects risk coming to a halt. Lenders, meanwhile, need confidence that work is complete, documentation is accurate, and lien risk is controlled before funds are released.
With the right financial systems, processes, and strategies in place, you can make loan draws smoother, reduce costly delays, and protect your project’s cash flow. Here are six best practices to follow:
1. Align Your Draw Schedule With Project Milestones
Start by negotiating a draw schedule that ties disbursements to major project milestones, including planning, design, permitting, and construction phases such as foundation, framing, roofing, systems, and finishes. Make sure your contract’s schedule of values matches up so lenders can easily see progress against the budget.
Adding a small contingency buffer for changes or slippage helps keep the process flexible. As a rule of thumb, a 5-10% contingency is considered best practice, depending on the project complexity.
2. Standardize Draw Packages and Quality Control
Missing documents are the fastest way to trigger a resubmission request. Create a checklist for every draw: invoices, lien waivers, progress photos, inspection reports, change orders, compliance certificates, and reconciliations. Build in an internal review step so every package is accurate, complete, and consistent.
“When draw packages are consistent and complete, approvals move faster with fewer questions. The more predictable your process, the less risk of delays for everyone involved,” says Lisa Baalman, lead construction advisor at Pinion.
3. Stay Ahead of Lien Waivers
Lien risk is a lender’s biggest concern. Require waivers from every subcontractor and supplier tied to your invoices, and track their timing carefully.
Confirm with your lender what type of lien waivers are required — conditional vs. unconditional, progress vs. final — and ensure they comply with all state and county regulations to be legally enforceable. Don’t let waivers expire or fall through the cracks — each missing document is a red flag that can freeze funding.
4. Schedule Inspections Early and Prepare Thoroughly
Draw approvals often hinge on inspections. Schedule inspections with an inspector or through the lender early, since they engage the inspector. Have the site accessible, documents organized, and someone ready to walk through the process. If work is still unfinished, explain it upfront to avoid delays.
5. Use Technology to Automate and Track
Manual processes leave room for errors and delays. Consider construction finance software designed for loan draws that integrates with your accounting system, centralizes documents, and sets reminders for key deadlines. Real-time dashboards also give you visibility into draw turnaround times and exception trends so you can continuously improve.
Baalman adds, “When you digitize the draw process, you’re not just avoiding mistakes — you’re creating a clear, real-time picture that both contractors and lenders can trust. That transparency keeps projects funded on schedule and reduces disputes down the road.”
6. Manage Change Orders and Communicate Proactively
Don’t wait for unapproved change orders to pile up. Document and submit change orders as soon as they arise, and make sure they’re reflected in future budgets and draws. Keep communication open with lenders and owners so no one is surprised by delays or adjustments. Transparency builds trust — and smoother approvals.
“Open communication with lenders throughout the project is just as important as strong documentation. Transparency builds trust, and trust keeps money flowing and projects moving,” advises Baalman.
Building Confidence in Every Draw
The draw process doesn’t have to be a bottleneck. With proactive planning, documentation, and strong communication, you can reduce delays, keep contractors paid on time, and protect lender relationships.
Connect with a Pinion advisor to discuss strategies that ease the loan draw process and safeguard your cash flow.
