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Investor guide. Updated October 26, 2026
How do construction draws work on a fix and flip or construction loan?
A renovation or construction holdback is not the same as cash available at closing. Confirm the written draw schedule: which costs are eligible, whether funds are advanced or reimbursed, what documents and inspections are required, and who approves and releases each draw. Plan the cash needed before a reimbursement arrives. Fees, timing and release conditions must come from the terms for your own project, not a general online estimate.
The draw process, from budget to release
- Confirm the approved budget. Match the scope of work, cost categories and draw schedule to the financing documents. Identify any holdback, contingency or amount that is not available at closing.
- Separate advances from reimbursements. Ask which costs, if any, can be advanced and which must first be paid from your own working capital. Confirm the treatment of deposits, stored materials and work completed before closing.
- Prepare a complete request. Confirm the submission channel, required budget lines, evidence of completion and supporting paperwork. Keep the request and its supporting documents together.
- Arrange the required review. Ask what inspection or other verification applies, how access is arranged and when the request is considered complete. Inspection is not the same as final authorization to release funds.
- Confirm release and reconcile the budget. Check the approved amount, deductions, payment instructions and remaining funds. Update the project cash plan before starting the next stage.
Your draw-planning checklist
Record the answers for your own file before relying on a reimbursement date.
| Confirm | Write down for this project |
|---|---|
| Funds at closing | Total commitment, acquisition proceeds, renovation holdback and any authorized initial advance. |
| Eligible work | Approved budget lines, completion requirements and treatment of materials or pre-closing costs. |
| Request requirements | Required request form, invoices, photos, receipts and any lien waivers or permits requested for the file. |
| Inspection and access | Who orders the inspection, what must be verified, site access and any reinspection requirements. |
| Fees and deductions | Draw or inspection charges, minimum request size and any retained amount. |
| Timing and responsibility | Who reviews, approves and releases funds, what starts each review period and what can delay it. |
| Interest basis | Whether interest applies to the full commitment, the outstanding balance or another basis in the loan documents. |
| Changes and final release | How to request scope or contractor changes, handle overruns and satisfy final-draw conditions. |
Plan cash around the sequence of work
Use a stage-by-stage cash plan rather than dividing the renovation budget into equal draws. Record contractor and supplier payments, the expected reimbursable amount, amounts that remain unreimbursed and the work that must be funded next. Include carrying costs and a buffer for review delays. Do not spend against an expected draw as though it has already been released.
What to check when a request stalls
- Is every requested line supported by the required evidence of completion?
- Is the work within the approved scope and budget, or does a change need approval?
- Are requested invoices, receipts, waivers or permits missing?
- Can the inspector or reviewer access the property and required information?
- Which review step is outstanding, who owns it and what is the next required action?
Massachusetts financing examples
Explore our Boston bridge financing example and seven-unit East Boston construction example. These are completed financing examples, not evidence that another project will receive the same draw terms or timing.
Where the 316 Capital team fits
316 Capital arranges business-purpose real estate financing through institutional capital providers. Ask your point of contact which party receives the draw request, makes the approval decision and releases funds for your file. Follow those instructions. Uploading a document is not by itself approval or authorization to disburse.
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Common questions
Do I get the renovation money at closing?
Do not assume the entire renovation budget is available at closing. Check the proceeds schedule and draw terms for any authorized initial advance, retained amount and reimbursement requirements.
How long does a draw take?
Ask for the inspection, review and release process for your specific financing. Confirm what makes a request complete and whether any conditions remain after inspection. A general estimate is not a committed funding date.
Do I pay interest on the rehab budget before I draw it?
Check the interest calculation in your loan documents. Confirm whether it uses the full commitment, outstanding funds or another defined basis, and ask how any holdback is treated.
Can I get reimbursed for materials I bought before closing?
Confirm eligibility before relying on reimbursement. Ask how the financing treats deposits, stored materials, installation dates and pre-closing costs, and what supporting documents are required.
What happens if I go over budget?
Do not assume the approved loan or holdback will increase. Review the contingency and change-approval process, tell your point of contact about the overrun and identify how additional costs will be covered before committing to the work.
Related guides
316 Capital is a private lending and capital advisory firm. We arrange business-purpose real estate financing through institutional capital partners; loans are not available for owner-occupied primary residences. This is a preparation guide, not a rate quote, disbursement authorization or commitment. Every quote is transaction-specific and subject to underwriting. Contact [email protected] or +1 (617) 546-4817.
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