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Debt & equity · 5 min read

Why construction draws can create unexpected equity calls

Understanding the gaps between approved construction spend, draw submission, lender funding and cash required on site.

Construction loans generally fund under a defined process. Operating bills do not always wait for that process. The difference can create an equity requirement even when a project is performing close to plan.

Separate eligible spend from available cash

A cost's eligibility for reimbursement does not mean cash is available to pay it today. Track when the cost is incurred, paid, certified, included in a draw and funded.

Model the complete draw timeline

Identify the cutoff date, compilation period, inspections or third-party approvals, submission date and lender payment timing. Estimate funding by probability where approvals remain outstanding.

  • Incurred cost
  • Vendor payment date
  • Draw submission and lender review
  • Actual cash receipt

Connect the debt model to the equity schedule

Show required sponsor and LP contributions in the same weekly view. A delayed draw, lender retainage, cost overrun or borrowing-base limit can change the equity need independently of the total forecast development cost.

What ownership should see

A helpful review focuses on the next 30, 60 and 90 days: how much liquidity is needed, what draws are expected, which assumptions are unconfirmed and what a 30-day delay would change.

Continue the conversation

What does this look like across your portfolio?

Bring your current process to a 20-minute discussion. We can explore the questions worth examining next.

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Start with clarity

Your next funding decision deserves a clearer picture.

Start with a short conversation about your active projects, draw timing and reporting process. No sales presentation required.