Ground up construction · California · The money
A construction draw schedule pays you late, on purpose.
Every construction draw schedule releases money after the work is standing, never before. So your own cash carries each stage until the draw clears, and the gap between those two dates is the real working capital line on the deal.
1 · The mechanism
A draw is a reimbursement, not an advance.
Namely: the lender buys work that already exists. Consequently the order of events decides your cash position, not the interest rate.
A construction draw schedule breaks the loan into stages. Each stage funds only once an inspector confirms the work is in place. Therefore you pay the trades first and recover the money second, every single time.
Four steps trigger every draw, and each one can stall.
First, you submit the draw request package. That means a sworn statement, lien waivers from every paid trade, an updated budget tracker and site photographs. Second, the lender sends a third-party inspector. Third, the inspector confirms the work is actually built, not merely paid for. Finally the lender wires the funds.
Notably a missing lien waiver stops the whole package. The inspector does not reschedule for you, so one absent signature can cost a week.
2 · The six
The standard California construction draw schedule runs six stages.
Lenders vary the percentages. Still, the milestones and the inspection points are remarkably consistent across the market.
| Draw | Milestone | What the inspector confirms | Share of loan |
|---|---|---|---|
| 1 | Foundation | Site cleared, excavation done, footings poured, stem wall up, underslab utilities roughed in | 15–20% |
| 2 | Framing and dry-in | Framing complete, roof on, sheathing and windows in, the building weather-tight | 20–25% |
| 3 | Rough MEP | Plumbing, electrical and HVAC roughed in, all passed by the jurisdiction, insulation begun | 15–20% |
| 4 | Drywall and exterior | Drywall hung and finished, siding or stucco complete, exterior paint, roofing finished | 15–20% |
| 5 | Interior finish | Cabinets, countertops, flooring, interior paint, trim, fixtures and appliances installed | 10–15% |
| 6 | CO and retainage | Certificate of occupancy issued, punch list closed, insurance converted, retainage released | 10–15% |
Every construction draw schedule in California front-loads the risk onto you. Read the first row again. Foundation work is roughly a fifth of the loan, and it funds only after the concrete is in the ground. So the deposit, the excavation and the first concrete pour all come out of your pocket.
Meanwhile draw two is the largest single release on most schedules. Getting weather-tight therefore matters twice: once for the building, and once for the cash.
3 · The holdback
Retainage keeps five to ten percent of every draw until the very end.
That money exists to finish the job if you walk. Consequently it is not available to you at any point during the build.
It applies to each draw
The holdback is taken from every release, not once at the start. So a 10% retainage on a $1,000,000 loan leaves roughly $100,000 unavailable across the whole build.
It releases at the certificate of occupancy
Not at final inspection, and not at substantial completion. The certificate is the trigger, and the punch list must be closed.
Your trades do not wait for it
Subcontractors invoice on their own terms. Therefore retainage is a gap you fund, unless you mirror the holdback down into your own trade contracts.
Submit-to-wire is rarely same week
Plan on seven to fourteen business days from a complete package to money in the account. An incomplete package restarts that clock rather than pausing it.
Budget moves need consent
Shifting money between line items without telling the lender is a common hold. Ask first, and the reallocation is usually routine.
Work ahead of schedule still waits
Building draw four before draw three is inspected does not accelerate funding. The inspector confirms the milestone in order.
So the real cost of a construction draw schedule is not the interest. Add the two numbers together and the working capital requirement becomes obvious. You carry the first stage in full, you carry the retainage throughout, and you carry roughly two weeks of lag on every release after that.
Generally a thirty-day cash buffer against the largest single draw is the figure that keeps a build moving. Below that, one held draw becomes a stopped site.
4 · The holds
Draws stop for paperwork far more often than for bad work.
Each of these is avoidable, and each one costs roughly a week when it happens.
| What triggers the hold | What it actually costs |
|---|---|
| A missing lien waiver | The package is incomplete, so the inspection is not ordered. One signature, one week |
| Work not fully in place | The inspector reports the milestone as partial and the draw funds at a reduced amount, or not at all |
| An undisclosed budget reallocation | The tracker no longer matches the approved budget, which reopens the whole line |
| A lapsed builder’s risk policy | Funding stops until the policy is current. Coverage dates are checked at every draw |
| A recorded mechanics lien | Lien priority is the lender’s whole security. Consequently this one stops everything |
| Permits expired or out of sequence | The jurisdiction sign-off is part of the rough MEP milestone, so the draw cannot clear without it |
Primary sources, worth reading yourself: California Department of Industrial Relations · Contractors State License Board. Reviewed 13 September 2026.
5 · The questions
What we are asked most about draws, answered short.
A construction draw schedule raises the same questions on nearly every ground up construction call.
Can I get money before work starts?
Not from the construction facility. Land and soft costs are handled at closing, whereas vertical construction funds only in arrears against completed work.
How long does a draw actually take?
Seven to fourteen business days from a complete package is the working figure. An incomplete package restarts the clock rather than pausing it.
Who pays the inspector?
You do, and the fee is per draw. So a six-draw schedule carries six inspection fees, which belongs in the budget rather than in the contingency.
Can I change the draw schedule after closing?
Sometimes, though it needs the lender’s written consent. Ask before the work happens, because a reallocation found at inspection is a hold.
Does interest accrue on the whole loan?
Generally interest accrues on the balance advanced, not the full facility. Therefore a slow schedule costs less in interest and more in everything else.
What if construction has already started?
That is a decline, and not only from us. Lien priority is compromised once work is visible, so no lender can control draws from the middle.
6 · Next
Read the schedule before you sign it, not at draw three.
We read the construction draw schedule with you before you sign it. Send the parcel and the budget. You get the milestones, the retainage figure and the working capital gap in writing.
Wexmoor Circle LLC · 930 Colorado Blvd, Suite 1, Los Angeles, CA 90041 · NMLS #2841970 · Reviewed 13 September 2026.
