Each bank has specific requirements, but the general principle is the same: money is withdrawn from the loan to pay contractors and suppliers.Understanding this process will enable you to have a streamlined construction process.How do draws work Banks will have forms that need to be filled out when submitting a draw.
The forms include the names of the companies or people being paid, the amount requested, and a corresponding line on the budget. Some banks offer online draw request forms where you simply enter the amount needed. ![]() The bank may even want lien waivers signed by the companies or contractors listed on the draw. They require waivers to prove the person was paid and prevent them from placing a Mechanics Lien on the property. Besides the paperwork trail, what else is important about draws Draws and the money they release keep the project moving. If a contractor is not paid on time, he or she can cease working until payment is received. A supplier can withhold material deliveries if your account has not been paid. These situations cause time delays which ultimately cost you money in interest, time, and aggravation. You will want to plan draws so that they keep the process moving. Sample Construction Draw Schedule Full 9Th DrawIn a typical 12 month construction loan, draws could look like this: 1st Draw pays soft costs such as permits, fees, architect, etc 2nd Draw pays excavator, septic and well (if applicable), pays for deposit on foundation 3rd Draw pays foundation contractor, puts deposit on lumber, windows, and doors 4th Draw progress payments to framer, electrician, plumber 5th Draw pays framer for completion, puts deposits on roofing and siding 6th Draw pays plumber, electrician, and HVAC contractors, pays for roofing and siding, and puts deposits on insulation and drywall 7th Draw insulation and drywall contractors are paid in full, deposits paid on interior trim, cabinets, countertops and painter 8th Draw Interior doors, cabinets, countertops and painter paid in full 9th Draw Flooring, appliances, and finish plumbing and electrical paid in full Of course, your individual draw schedule will vary from this example. Sample Construction Draw Schedule Series Of ProgressBut as you can see, draws involve a series of progress payments, deposits, and final payments. Organizing them will allow you to keep the contractors and materials arriving on the job site. Make sure that your contractors understand the draw schedule. Builders like to be paid when work is completed, and keeping them happy will make your life easier. However, if they understand the draw process, they will understand what you must go through to get the money. This will alleviate much of the stress surrounding the touchiest of subjects: money. If you plan your draws and make contractors aware of the process, you can keep work progressing in a timely fashion.
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