Commecial construction lenders don't just hand a borrower $1 million and then say, "Gee, I hope he actually builds the commecial building he promised to build." No. The construction loan funds are carefully dispursed to make sure project gets completed according to the plans and specifications. The term plans refers to the plans and drawings drawn up by the architect and approved by the city or county. The term specifications refers to the building specifications required by the architect and the licensed civil engineer that must also be approved by either the city or the county. The building specifications are a statement of building requirements describing the loading conditions, design practices, materials and finishes. If the contractor does not use the specified materials, the building could conceivably collapse. There are two different ways to disburse a commercial construction loan - the draw system and the voucher system. In the draw system the funds are typically disbursed to the developer or the general contractor in four to six major disbursements. A draw schedule is prepared that describes what work will be performed with the funds, such as clearing the land, grading the land, compacting the land, pouring the foundation, etc. The developer cannot get his next draw until all of the work contemplated using the prior draw has been completed. I heard a joke today - apparently an old joke among construction lenders - about the lender watching the developer drive away from the property in a brand new Mercedes with the license plate, "First Draw". Under a voucher system, the developer does not get any large disbursements. If a material supplier or subcontractor wishes to get paid, the supplier submits an invoice to the developer, who forwards it on to the lender with a voucher, which is a statement that the supplier has properly delivered the supplies and is entitled to payment. The lender then pays the voucher. The problem with the voucher system is that is requires the lender to make several disbursements a week, which is very time-consuming and costly. You can apply to scores of commercial construction lenders using C-Loans.com. | 
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