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BUSINESS FINANCE

Commercial construction loan: how progressive drawdown works

Commercial construction loans fund the build in stages, with each drawdown released against verified progress. Plain-English explainer of how the drawdown schedule works, what a quantity surveyor does, and the cash flow planning that goes with it.

Paul Raymond · Contributor·24 August 2026·4 min read

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Commercial construction loans differ from standard commercial property loans in one key way: the lender does not advance the full loan amount at settlement. Instead, the loan is drawn down in stages as the build progresses, with each drawdown released against verified progress on site. This article explains how the drawdown schedule actually works, the role of a quantity surveyor, and the cash flow planning that goes with it. For broader context, see commercial property finance.

Why construction lending uses progressive drawdown

The risk profile of a half-built commercial property is very different from a completed one. Mid-build, the lender security (the partially completed structure) is worth substantially less than the eventual finished asset. If construction stalls or the borrower defaults at the 60 per cent stage, the lender is left with an incomplete asset that is hard to value, hard to sell, and may require significant further investment to make finishable.

Progressive drawdown manages this risk by releasing loan funds only as construction value is added. If the build stalls at 60 per cent, the lender has only advanced approximately 60 per cent of the loan, so the loan-to-asset-value ratio remains controlled even mid-build.

The borrower receives funds in stages that align with construction milestones, which also has cash flow benefits: you only pay interest on what has actually been drawn, not on the full eventual loan amount.

Typical drawdown stages

For a standard commercial construction loan, the drawdown schedule usually follows the major construction milestones. The exact stages vary by lender and project but a common pattern:

Stage 1: Land purchase and site preparation. Funds released at settlement to acquire the land, plus initial preparation costs (clearing, surveys, soil testing). Typically 25 to 40 per cent of total loan.

Stage 2: Slab and structure. Released when foundations and structural elements are in place. Typically 15 to 20 per cent of loan.

Stage 3: Lock-up. Released when the building is enclosed (walls, roof, external doors and windows). Typically 15 to 20 per cent.

Stage 4: Fit-out. Released when interior work is substantially complete (services, finishes, fittings). Typically 15 to 20 per cent.

Stage 5: Practical completion. Final drawdown released when the building is practically complete and ready for occupation. Typically 5 to 15 per cent retained until this stage.

For larger projects, the schedule may have 8 to 12 stages with finer granularity. For smaller projects, 3 or 4 stages is more common.

The quantity surveyor role

A quantity surveyor (QS) is the independent third-party expert who verifies construction progress at each drawdown stage. The QS visits the site, assesses what work has actually been completed, compares it against the contract specification, and issues a progress certificate that the lender uses to release the next drawdown.

The QS is appointed at the start of the project and engaged by the lender (with the cost typically passed through to the borrower as part of the loan fees). For most construction loans, the QS visits monthly or per drawdown stage.

The QS role is not just signing off drawdowns. They also review the initial construction contract for completeness, assess cost contingencies, monitor for cost overruns, and flag any quality or specification concerns to the lender. For larger projects they are a critical risk-management role.

Interest during construction

Construction loan interest is typically capitalised during the build phase rather than paid monthly. This means interest accrues against the loan balance as you draw down, but you do not make cash repayments during construction. The build proceeds without the cash flow strain of monthly loan payments.

Once practical completion is reached and the project is income-generating (a sold-on-completion property, a tenanted commercial space, or refinanced into a long-term commercial loan), the loan switches to standard amortising repayments.

Capitalised interest needs to be factored into the total loan size at the start. On a 12-month construction loan at 9 per cent capitalised, the loan balance at end of construction is roughly 7 to 8 per cent higher than the original drawdown total. Lenders include the interest capitalisation in their loan-to-cost calculations.

Cash flow planning during a build

Even with a construction loan in place, the borrower still has cash flow demands during the build:

Builder progress payments. The drawdown happens after the QS verifies the work, but the builder typically wants payment soon after completing each milestone. There can be a 2 to 4 week timing gap between the builder issuing a claim and the drawdown landing in your account. Plan working capital for this gap.

Owner-supplied items. If you are supplying any items directly (fit-out, specialist equipment, soft furnishings), those costs sit outside the construction loan and need to be funded separately.

Holding costs. Council rates, insurance, site security, utilities. Modest individually but add up across a long build.

Cost overruns. The contingency in the original budget needs to be real, not optimistic. Builds running over budget by 10 to 15 per cent are common; the borrower funds the overrun unless the contract includes a fixed-price guarantee.

When construction loans become development finance

For larger commercial projects (multi-unit, mixed-use, large-scale redevelopment), construction financing usually sits alongside other capital sources (senior debt, mezzanine, equity) in a capital stack. At that scale the structure becomes development finance, which is a more complex category covered separately. See private lending for business for adjacent context.

Typical loan terms

For a standard commercial construction loan in Australia:

Loan-to-cost: 65 to 75 per cent (you fund 25 to 35 per cent of total project cost from your own equity).

Term: 12 to 24 months of construction, then converted or refinanced.

Rate: 8 to 13 per cent per annum during construction, capitalised.

Establishment fee: 0.75 to 2 per cent of loan amount.

Pre-sales or pre-leases. For larger or speculative projects, lenders often require 50 to 100 per cent pre-sales or pre-leases before any drawdown occurs.

Where to from here

We arrange commercial construction finance across our panel of bank and specialist construction lenders, including the quantity surveyor appointment and drawdown coordination. No fees to clients; the lender pays us when finance settles. Book a 20-minute brief to discuss your project.

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BUSINESS FINANCE

The 7-day approval: what lenders need to see for a fast unsecured business loan

Fast unsecured business loans in Australia can settle in 24 to 72 hours when the documentation is right. Plain-English run-through of what lenders actually need to see, and the common mistakes that turn a fast deal into a slow one.

Paul Raymond · Contributor·20 August 2026·3 min read

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A well-prepared fast unsecured business loan application can settle in 24 to 72 hours through specialist fintech lenders in Australia. The same application incompletely prepared can take 2 weeks or get declined entirely. This article walks through what lenders need to see for a fast turnaround and the common mistakes that turn what should be a quick deal into a slow one. For broader context, see what is working capital.

Why fast unsecured loans are even possible

Fintech lenders that specialise in fast unsecured business lending have built their underwriting around two ideas. First, automated cash flow analysis using bank statement integration: the lender pulls 6 to 12 months of business banking data directly and assesses serviceability from real transaction patterns rather than from accountant-prepared financials. Second, asset-light decisioning: the lender prices the risk and lends based on demonstrated trading rather than on collateral.

The combination produces approval timelines that mainstream banks cannot match. The trade-off is rate: fast unsecured lending runs 12 to 30 per cent per annum, much higher than secured bank lending. For situations where the speed matters more than the rate, the trade-off makes sense; for ongoing facility needs where you have weeks available, traditional bank lending is usually cheaper.

What lenders need to see

For a fast approval, the lender needs to assess three things quickly: who the business is, can the business afford the loan, and is the director profile clean.

Business identity:

ABN registered for 6 to 12 months minimum (some lenders require 2 years; the most flexible accept 6 months).

GST registration where the business turnover triggers the threshold.

Business structure: company, trust, sole trader, partnership. Sole traders have fewer lender options than companies but it is still workable.

Trading evidence:

Minimum monthly turnover. Most fast lenders require $5,000 to $10,000 per month minimum across the last 3 to 6 months.

6 months of business bank statements (often provided via secure read-only integration with your bank rather than as PDFs).

Last 2 BAS statements where applicable.

Director profile:

Clean credit file for the director(s) and any guarantors. Recent defaults, current arrears with other lenders, or unresolved court matters slow or block the application.

Director ID and proof of address.

The integration trick that speeds everything up

The single biggest speed difference between fast lenders and bank lenders is bank statement integration. Fast lenders use secure read-only API access (typically via providers like Illion, Equifax, or direct bank integrations) to pull your last 6 to 12 months of business banking transactions in under a minute.

Once the data is pulled, automated analysis assesses average turnover, average closing balance, customer concentration, expense patterns, and serviceability. A loan decision often follows within a few hours.

Compared to the traditional approach (you provide PDF bank statements, the lender manually keys data, an analyst reviews, a credit committee approves), the integration approach removes days from the process.

You will be asked to authorise this integration as part of the application. The access is read-only and time-limited; the lender cannot move money or change anything in your account.

Common mistakes that slow the deal down

Wrong bank account for integration. The lender needs the OPERATING account, not a savings or sub-account. Pointing them at the wrong account produces a low-turnover read and either declines or shrinks the offer.

Documents in the wrong format. PDFs of bank statements are slower than direct integration. Photos of documents (instead of PDFs) are slower again. Use the integration option where available.

Incomplete director information. Missing date-of-birth, address history, or current driver licence number all generate back-and-forth that adds days.

Applying through the wrong product. Some lenders offer multiple products (unsecured loan, line of credit, invoice finance). Applying for the wrong one wastes time. A broker (or the lender themselves) can route you to the right product.

Recent shopping for finance. Each credit enquiry shows on your file. If you have made 3 to 5 enquiries in the last few months, the next lender treats you as desperate. Avoid scattered shopping; submit to 2 lenders maximum at any time.

When to choose fast unsecured over alternatives

Fast unsecured is the right product when the funding need is one-off, time-critical, and small to medium ($5,000 to $500,000 typically). For ongoing cash flow management, an overdraft is structurally cheaper. For invoice timing problems specifically, invoice finance fits better. For larger or longer-term needs, secured lending wins.

Realistic timelines

With everything prepared correctly:

Day 0: Application submitted, bank integration authorised.

Day 0-1: Automated decision (approval, conditional approval, or decline).

Day 1-2: Documentation issued (loan contract, direct debit authority).

Day 2-3: Settlement, funds in your account.

For deals with complications (older ABNs, larger amounts, structural questions) add 2 to 5 days for human review.

Where to from here

We arrange fast unsecured business loans across the major fintech lender panel, matching the application to the lender most likely to approve quickly on competitive terms. No fees to clients; the lender pays us when finance settles. Book a 20-minute brief to start the process.