Fix-and-Flip Draw Schedules: Request, Inspection, and Funding

What Is a Draw Schedule

A draw schedule is a payment plan for construction funds. Instead of receiving your entire loan balance at closing, you request disbursements in stages as work progresses. Each draw is tied to completed milestones: foundation, framing, rough-ins, drywall, finishes, and final walkthrough. This approach protects both the lender and the borrower by ensuring funds are only released when work is actually done.

Draw schedules reduce risk. The lender verifies that contractors completed work to specification before releasing money. The borrower avoids overpaying for incomplete or substandard work. It's a checkpoint system built into your construction timeline.

The Draw Request Process

Once your fix-and-flip loan closes, your account representative provides draw request instructions. Most requests begin with you or your project manager submitting documentation:

• Proof of work completion (photos, receipts, contractor invoices)
• A written request identifying which budget line items are complete
• Contractor lien waivers, if required by your specific loan structure
• Updated project timeline and any scope changes

Requests typically go to your loan officer or a designated construction specialist. The timeline from submission to funding approval usually spans 3–7 business days, though urgent requests may be expedited. Clarity in your submission—specific photos, itemized invoices, and honest status updates—speeds approval.

Inspection and Verification

After you submit a draw request, Silt Capital's team reviews the documentation and may order a third-party inspection. An inspector visits the property to verify that work claimed in your request actually exists and meets quality standards.

What inspectors check:

• Completion of stated work (framing installed, electrical rough-in finished, etc.)
• Compliance with building code and local permitting requirements
• Contractor quality and adherence to the original project plan
• Material deliveries and on-site inventory if claiming material costs upfront

Inspectors do not perform code inspections—that's the role of your local building department. Instead, they confirm that paid-for work is done and visible. A typical inspection takes 1–2 hours. The inspector provides a report, and your account team reviews it before releasing funds.

If the inspection reveals incomplete work, missing materials, or quality issues, the draw is held pending correction. You and your contractor address the gaps, resubmit photos or documentation, and the inspection process repeats. This cycle protects your equity and ensures the property's value reflects your investment.

Funding and Disbursement

Once inspection passes and documentation is complete, funds are disbursed directly to your operating account, a title company holding account, or the contractor's account—depending on your loan agreement and state requirements. Some borrowers use a title company as a neutral third party; others manage contractor payments directly. Your account representative confirms the wire destination before each draw.

Funds typically arrive within 1–2 business days of final approval. Your loan agreement specifies whether draws are made payable to you, your LLC, the contractor, or a combination. If you're working with a general contractor managing subcontractors, you often receive the draw and then pay out. If the contractor is your loan partner, funds may go directly to them.

Keep detailed records of every draw: the date requested, the date approved, the amount, the work completed, and the date funds arrived. This documentation is essential for tax purposes, liability protection, and proving you've stayed on budget if you refinance or sell.

Common Draw Scenarios

Scenario 1: On-Budget Project You request $50,000 for framing, drywall, and electrical. The inspection confirms all work complete. Funds disburse within 48 hours. No delays.

Scenario 2: Incomplete Work You submit a draw for $75,000 claiming all rough-ins are finished. The inspector finds electrical rough-in incomplete. The draw is held. Your electrician finishes the work. You resubmit photos. Inspection confirms. Draw approved 3 days later.

Scenario 3: Budget Change Midway through rehab, you discover structural damage requiring an extra $20,000 in framing. You request a budget revision before submitting a draw. Your account team evaluates the scope change, confirms funds are available under your max LTV, and approves. The draw then proceeds with the new scope included.

Staying Organized

Successful draw management requires discipline. Maintain a project timeline and checklist aligned to your original budget. Photograph work at each stage before requesting payment. Have your contractor provide invoices and proof of material purchases. Submit draws on schedule—don't wait until the project is complete to request all draws at once, as this can delay final funding and create documentation gaps.

Communicate with your lender early if scope changes, delays, or cost overruns appear. Most lenders can adjust draw schedules and budgets before they become problems. Surprises at inspection time slow projects and eat into your profit margin.

Interest and Timeline

Fix-and-flip loans are interest-only during construction. You pay interest on the drawn balance, not on the full loan amount. This incentivizes efficient project completion. The faster you finish and stabilize the property, the sooner you can refinance, sell, or move to the next project.

Typical fix-and-flip timelines run 6 to 12 months from closing to sale or refinance. Draw schedules must align with this pace. Plan your draws to match your contractor's workflow, material delivery schedules, and inspection availability.

Silt Capital lends for business purposes only. Nothing here is a commitment to lend, an offer of credit, or investment, legal, or tax advice; terms quoted are indicative and subject to underwriting, appraisal, and final credit approval.