Loan Disbursements
How funds are disbursed for new construction loans.
| Disbursement Type | Requirements | Documentation |
|---|---|---|
| Initial Disbursement | Based on approved costs and initial needs | Closing documents, approved budget |
| Draw Disbursements | Based on completed work | Draw request, inspection report |
| Contingency Funding | For unexpected costs | Change orders, documentation of need |
| Builder/Contractor Fee | Paid based on completion percentage | Verification of work completed |
| Equity Shortage | Additional borrower funds required | Proof of additional equity contribution |
Step 1: Submit Draw Request
Borrower submits formal draw request with detailed breakdown of completed work and costs.
Step 2: Inspection
The G1 Group orders third-party inspection to verify completed work.
Step 3: Review and Approval
Draw request and inspection report are reviewed for consistency with approved budget.
Step 4: Disbursement
Approved funds are disbursed to the borrower or directly to contractors/suppliers.
Step 5: Documentation
All disbursements are documented and tracked against the total approved loan amount.
Scenario
During foundation work, unexpected soil conditions require additional excavation and foundation reinforcement, increasing costs by $25,000.
Solution
The borrower immediately notified The G1 Group of the issue, providing documentation from engineers and contractors. The $25,000 contingency was accessed, and the developer contributed the additional $15,000 in equity to cover the shortfall.
Outcome
Despite the initial setback, the project proceeded smoothly after resolving the foundation issues. The additional investment in proper foundation work enhanced the property's value, resulting in a sale price $30,000 above the original appraisal.