What is a construction progress draw facility?
A construction progress draw facility is business finance released in stages as a build progresses, rather than in one lump sum at settlement. The lender approves a total limit up front, then pays out each draw once a stage is finished and signed off. You only pay interest on what’s actually been drawn. It suits established businesses funding a fit out, a warehouse extension or a commercial build where costs land over months, not on day one.
How the draws actually get released
Each draw is tied to a stage of the build. Slab, frame, lock up, fit out, practical completion. Before money moves the lender usually wants evidence that the stage is done, which often means a quantity surveyor or valuer inspection, updated invoices from the builder and confirmation the job is still on budget. Draws are paid in arrears, so your builder or your own working capital typically carries the stage first. Interest is usually charged only on the balance drawn to date, which keeps the early cost lower than a fully drawn business loan.
What lenders look at before approving
The build gets assessed as hard as your business does. Expect the lender to want a fixed price contract with a licensed builder, council approvals, a costed schedule of works and evidence you can service the debt once the project is finished. Most will lend against the finished value rather than the land alone, so a contingency for cost overruns matters.
- Your own contribution usually goes in first
- Terms are commonly short, then refinanced onto a commercial mortgage
- GST and depreciation treatment is a question for your accountant
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Last updated 15th July 2026. Reviewed by Authorised Credit Representative 554584 of Australian Credit Licence 414426.