Drawdown is the moment a lender actually advances loan funds. On a simple bridging loan, drawdown happens once at settlement, the full facility is advanced as cleared funds on day one.
On larger or staged facilities, drawdown happens in tranches against documented milestones. A development loan might have an initial drawdown at settlement to fund land acquisition, then progress drawdowns at completion of each construction stage (concrete slab, framing, lock-up, completion) certified by a quantity surveyor.
The drawdown structure is set out in the loan documentation. Each tranche typically requires conditions precedent, a QS certification, valuation refresh, evidence of stage completion, satisfaction of leasing conditions, before the lender will advance the next tranche.
Borrowers should plan cashflow around drawdown timing. A construction loan's drawdown schedule needs to align with the builder's payment claims and the borrower's equity injections in between. Misalignments here are the most common cause of stress on otherwise-sound development files.