Hard Money Loan Draws

[Katrina O'Bannon]

I have a current deal in process and my hard money lender (Zeus Lending) is taking about a month to do a simple draw request for work that has been completed. With this timeframe it will take several months to complete a rehab. What is the typical timeframe for hard money lenders to release funds when you request a draw for work that is complete? 

[Jeff S.]

Something seems off here, @Katrina O'Bannon. One month is an unusually long time and your lender should know that. Your contractors will want to be paid without delay. A day or two one way or another shouldn’t be a big deal. A one-month turnaround, assuming you’ve given your lender everything they need, is unworkable.

Too late now, but this should be one of your due diligence items when you select a lender. Questions for them that you might consider include:

• What do I need from me to submit a complete draw request?
• What do you charge per request?
• From my first call or email to you, how long do you typically take to fund a request?
• Are your draw inspections performed in-house or by an outside inspection company?
• Who do you use and how fast from your call to them will they come out?
• Will you prorate payment if the work isn’t 100% complete?
• Do you send payment to me or to my contractor?
• Do you require a lien release for work performed?
  I agree that it doesn’t matter whether this is in writing or not. If you didn't do it this time, next time ask for references.