Glossary

Drawdown

What a drawdown is, how staged drawdowns work on a construction facility, and how they differ from a revolving line of credit.

A drawdown is an amount of an approved facility actually advanced to the borrower, and on facilities that release funds in stages, such as construction finance, each drawdown corresponds to a verified milestone rather than the full loan being advanced upfront. Staged drawdowns protect the lender by matching funds released to work genuinely completed, verified through a progress claim and a quantity surveyor's report before each release. On a revolving facility such as a business line of credit, drawdown works differently again — funds can be drawn and repaid repeatedly within an approved facility limit, rather than progressing through fixed, one-way construction milestones. Borrowers should plan cash flow around the practical timing of each drawdown, since a gap between when costs are incurred and when the corresponding drawdown clears is common on any staged facility.

Related

Construction finance · Business lines of credit · Progress claim

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