What is a draw request?

A draw request occurs on loans where funds are dispersed incrementally as a project advances. Hard money construction loans are often structured as a draw contract. These contracts require that project milestones be inspected and proven before certain parts of the loan are released. The idea behind these contracts is simple. Lenders want to ensure contractors are completing work on the project while contractors need money for each increment.

The process of asking for a dispersal of funds for an increment of the project is called a draw request. Hard money loans are composed of three types of funds: acquisition, interest reserves, and construction reserves. Once the loan is finalized, certain funds, known as acquisition funds, are immediately released to the borrower. Construction reserves, on the other hand, must follow a draw request procedure in order to be released. This money is held by the borrower until needed to progress the project. When this time comes, borrowers should make a draw request to be compensated for work already done, which is to be used for the acquisition of needed materials or labor for subsequent parts of the project. It makes the most sense to take four separate draw requests.

Remember that acquisition funds are released at the time of loan closing. These funds can be used to get the project off the ground and pay for initial expenses. Of course, as work advances, you will need rehab draws, or disbursements for project increments. You can read more about the process of getting a draw below. Because it requires project inspection and documentation, it makes sense to split the project into four 25% increments. Reserve funds will be dispersed in this situation only four times based on quarterly draw requests.

How can you make a draw request?

In order to access construction reserves through a draw request, borrowers must consent to an examination of the project by the lending party. This will generally involve a third, neutral party inspector who has the expertise required to assess the project status against the project components specified in the project budget. In order to process a draw request, you’ll have to pay mind to the following guidelines.

  1. Fill out our form at here
  2. Use the provided lines to specify which of your line items you are requesting funds for, specifying a description of the work and dollar amount of draw requested
  3. Provide adequate documentation for expenditures associated with the draw request: these include invoices and receipts for labor, capital, materials, etc.
  4. Agree to our borrower certification terms, which state that a borrower certifies that all work has been performed in a good and workmanlike manner, free of any liens or encumbrances and is in accordance with the previously approved Escrow Agreement executed as of even date with the loan.
  5. At this point in time, Wildcat Lending will arrange for a third-party inspection of the project site
  6. The inspector will follow up with you and visit the property to take photographs and complete a written report generally within 1 to 2 business days of inspection
  7. Wildcat Lending will review the findings of the inspector’s report in addition to documents requested during the draw request from borrower, including invoices, receipts, ect.
  8. Based on the review of borrower documentation in addition to the inspector’s report, Wildcat Lending will determine the ultimate dispersal amount — note that this may not be equal to the amount of funds requested
  9. Our staff will wire the money over to you in accordance with draw contract terms

Please note that this process is required for draws until construction reserve funds are exhausted. We believe our draw request process is borrower friendly while being necessarily rigorous. Our service team is dedicated to clarifying any issues throughout the entire process.

If you’re looking for a hard money loan, you’ll find that Wildcat Lending is a superb private money lender for complex construction projects. Our years of experience and dedication to customer service and clarity make us a distinctive hard money lender in Texas.

If you’ve been disappointed by banks, get in touch today to learn about all the ways in which we differ. Our experience is in the construction industry, and we believe this makes all the difference.

Draw contracts are ideal for longer term construction projects. By following our simple draw request process, you’ll save many headaches compared to competitor lenders. So contact us today and learn more about how you can finance your next project better with Wildcat Lending.