If a borrower fails a draw inspection...

[Steven Line]

Hi - 

I'm a hard money lender. I've done about 60 deals and all went well instead for one back in 2013. On that deal I showed up for a draw inspection and they hadn't done much work. I had already forwarded the draw based on input from a partner. It's a long story about things that I did wrong and I learned a lot of lessons so lets avoid all that discussion and just focus on this specific question:

When you do a draw inspection and the borrower hasn't done the work they claimed or bought materials for the property from the initial draw, what are your options as a lender? 

If I refuse the draw and they don't have another money source to get back on track then the project stops and I'll never get my money out. 

Thoughts?

What have other lenders done when a borrower hasn't met the draw requirements?