Definition
The staged release of loan funds during a development project, triggered by the completion of pre-agreed construction milestones. Each drawdown is typically verified by the lender's monitoring surveyor before funds are released. The drawdown mechanism ensures the lender's exposure increases proportionally with the value being created on site.
See also
Closely related terms.
Monitoring Surveyor
An independent surveyor appointed by the lender to inspect the development site at regular intervals and verify that construction work has been completed to the required standard before each drawdown is released.
Retention
A percentage of each construction drawdown held back by the lender as a safeguard against cost overruns or incomplete works, typically 5% to 10% of each drawdown amount.
Facility Agreement
The legal contract between a borrower and a lender that sets out all terms and conditions of the loan including the facility amount, interest rate, drawdown mechanics, repayment terms, covenants, and events of default.
Day One Advance
The initial tranche of a development or bridging loan released on the first day of the facility, typically used to fund the site acquisition.
Further reading
Guides that touch this term.
Guide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readReadGuide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
Hidden Arrangement Fees in Development Finance: What Lenders Don't Tell You
Arrangement fees in development finance are rarely as straightforward as a single percentage. This guide exposes the hidden layers of fees that lenders charge and shows you how to negotiate effectively.
9 min read readRead
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