Drawdown

A drawdown is when a borrower accesses funds from an approved loan facility. Term loans are typically fully drawn at completion - the full loan amount is transferred to the borrower on a single date. Development finance, revolving credit facilities, and some invoice finance facilities allow staged or flexible drawdowns over time.

For development finance, drawdowns are typically tied to construction milestones and independently monitored - the lender releases funds when work is verified by a monitoring surveyor. This structure protects the lender by ensuring funds are not drawn before the corresponding work is completed.

The distinction between approval and drawdown is important in practice. A facility may be approved, with all legal documentation signed, but funds not yet drawn. Interest typically accrues from the drawdown date (or from drawdown for revolving facilities), not from approval.

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