HOW DO YOU LIKE YOUR CONSTRUCTION LOAN FUNDS RELEASED—BIG CHUNKS OR LOTS OF LITTLE PAYMENTS?
Honestly, I’ve seen the smaller, frequent draws cause more headaches than they solve. In theory, it’s supposed to “protect everyone,” but in practice, it just means more paperwork, more waiting around for approvals, and—like you said—a lot of stop-and-go on site. I’ve worked with builders who get pretty frustrated when they can’t keep momentum because they’re waiting for the next payment to clear. It’s not just about their cash flow either; it messes with scheduling trades and deliveries. You end up with a domino effect where one delay leads to another.
That being said, I get why lenders want to minimize risk, especially if it’s a custom build or there’s a lot of unknowns. But at some point, you have to trust your builder and the process. I’ve found that bigger chunks tied to actual milestones (like foundation done, framing up, etc.) work better for everyone. Less micromanaging, more progress.
Have you talked to your builder about how they prefer to handle draws? Some are used to the smaller payments and just factor in the hassle, but others might push back hard if it starts impacting their workflow. I’ve even seen cases where a builder will walk away from a job if the payment schedule gets too restrictive—especially in a hot market where they’ve got other options.
Curious if your lender is open to negotiating the draw schedule at all, or if they’re set on this “lots of little payments” approach? Sometimes there’s wiggle room if you can show that your builder has a solid track record.
HOW DO YOU LIKE YOUR CONSTRUCTION LOAN FUNDS RELEASED—BIG CHUNKS OR LOTS OF LITTLE PAYMENTS?
- Been in the middle of this debate more than once. The “lots of little payments” approach really does slow things down—especially when inspectors or lenders drag their feet.
- Had a project last year where we were stuck waiting for a $5k release just to finish drywall. The crew lost a week, and it threw off the whole schedule.
- I get the lender’s caution, but like you said,
Milestone-based draws just make more sense to me. Less red tape, smoother workflow.“at some point, you have to trust your builder and the process.”
- Only exception I’ve seen work is with super inexperienced builders, but that’s rare in my experience. Most pros just want to keep things moving.
HOW DO YOU LIKE YOUR CONSTRUCTION LOAN FUNDS RELEASED—BIG CHUNKS OR LOTS OF LITTLE PAYMENTS?
I’ve been burned by the “lots of little payments” setup more than once. The first time I built, I thought it’d keep things tidy and make sure I didn’t get ahead of myself. In reality, it just meant I spent half my time chasing down paperwork and waiting for the inspector to show up. There was one stretch where we were literally waiting on a $3k draw to pay for insulation—meanwhile, the crew was sitting around, and I was getting calls every day asking when they could get back in. That week cost me more in delays than the payment itself.
I get why lenders want to be careful, but like you said:
“at some point, you have to trust your builder and the process.”
If you’ve got a solid crew and you’re not trying to cut corners, milestone-based draws just make sense. Framing done? Release the funds. Roof on? Next chunk. It’s cleaner, and everyone knows what’s expected.
The only time I saw the small payment thing work was when my neighbor GC’d his own build with zero experience. He actually needed that level of oversight because he kept missing stuff, but that’s the exception, not the rule.
Funny thing is, lenders always talk about “protecting their investment,” but dragging out payments can actually put the project at risk if subs walk or prices go up while you wait. Not saying there shouldn’t be any checks, but too much red tape just gums up the works.
If I ever do this again, I’m pushing hard for bigger milestone draws. Less stress, fewer headaches... and maybe I’ll actually finish on schedule for once.
HOW DO YOU LIKE YOUR CONSTRUCTION LOAN FUNDS RELEASED—BIG CHUNKS OR LOTS OF LITTLE PAYMENTS?
I get where you’re coming from, and I’ve definitely seen the “death by paperwork” thing drag projects out. But honestly, I’ve also watched a few jobs go sideways when milestone draws were too big or spaced too far apart. Sometimes stuff gets missed or rushed just to hit that next payout, and then you’re stuck fixing mistakes later.
I actually like a hybrid approach—bigger payments for major milestones, but with a couple smaller ones sprinkled in for things like inspections or materials that don’t fit neatly into the big phases. Keeps everyone moving without leaving subs hanging or making the GC front too much cash.
It’s not perfect, but I’ve found it helps balance trust with accountability. Plus, if you set expectations up front and keep communication open, it usually smooths out most of the headaches... at least in theory. Construction’s never totally drama-free, right?
HOW DO YOU LIKE YOUR CONSTRUCTION LOAN FUNDS RELEASED—BIG CHUNKS OR LOTS OF LITTLE PAYMENTS?
I actually like a hybrid approach—bigger payments for major milestones, but with a couple smaller ones sprinkled in for things like inspections or materials that don’t fit neatly into the big phases.
Yeah, I’m with you on mixing it up. I’ve had projects where the big milestone payments left me sweating, especially when delays hit and I felt like I was paying for stuff that wasn’t even done yet. But too many little payments just turns into a paperwork nightmare. The hybrid thing makes sense—just gotta make sure everyone’s clear on what counts as a “milestone” so there aren’t any surprises. Communication really is everything... learned that the hard way more than once.
