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Construction Loan Disbursement Agreement
Free construction loan disbursement agreement template — establishes how a lender releases construction loan funds to a borrower as work progresses.
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This free construction loan disbursement agreement covers 1. Disbursement Method, 2. Draw Request Process, 3. Retainage, 4. Inspection, 5. Title/Lien Protection with 4 clearly marked [placeholder] fields to fill in — built for small businesses and individuals documenting a loan or expense putting financial terms in writing so both sides have a clear, shared record. Copy it into your own word processor, fill in the placeholders, and review it — or adapt it — before use. It's part of docstoc's free document template library, alongside business, legal, real estate, finance, and HR templates. Every template here is free to copy with no signup required, and each one carries a plain disclaimer: this is a starting point for informational purposes, not a substitute for advice from a licensed professional in your jurisdiction.
Construction Loan Disbursement Agreement
Lender: [Name] · Borrower: [Name] · Project: [Description/Address] · Total Loan Amount: [Amount] · Date: [Date]
1. Disbursement Method
Loan proceeds will be disbursed [ ] via draw requests tied to construction milestones per the schedule in Exhibit A [ ] via a monthly draw based on percentage of completion, verified by inspection.
2. Draw Request Process
Borrower submits a draw request with: [contractor invoices, lien waivers from subcontractors for prior draws, and a completed AIA-style application for payment], reviewed by Lender's inspector before funds release.
3. Retainage
Lender will withhold [%] retainage from each draw, released upon [substantial completion / final inspection and lien-free completion confirmation].
4. Inspection
Lender (or its independent inspector) will inspect the project before approving each draw, to confirm completed work matches the amount requested.
5. Title/Lien Protection
Borrower will provide lien waivers from the general contractor and major subcontractors with each draw request, and Lender may require a title update before disbursing funds to confirm no new liens have been recorded.
6. Cost Overruns
If total project costs exceed the loan amount, Borrower is responsible for funding the shortfall [before Lender releases further draws / per the terms of any contingency reserve established at closing].
7. Completion and Conversion
Upon satisfactory completion (confirmed by final inspection and certificate of occupancy, if applicable), remaining funds are disbursed and [the loan converts to permanent financing / is due in full, per the underlying loan agreement].
Lender: ______________________ Date: ____________ Borrower: ______________________ Date: ____________
*Requiring lien waivers with every draw (Section 5), not just at the end of the project, is what protects a lender from funding a project that quietly accumulates unpaid subcontractor liens along the way — catching that early is far easier than discovering it after the loan is fully disbursed.*
Edit directly in the box above. Download PDF anytime — the docstoc.io footer is always included and cannot be removed.
What's included
- Edit online — click the document, fill in placeholders, download a PDF
- 7 standard sections: 1. Disbursement Method, 2. Draw Request Process, 3. Retainage, 4. Inspection, 5. Title/Lien Protection, 6. Cost Overruns, …
- 4 clearly marked [placeholder] fields for quick personalizing
- Free to use — no account or signup required
- Fully editable — adjust any clause to match your actual situation
- Includes a signature block, ready to print or sign digitally
- Fixed docstoc.io footer on every PDF (not removable)
Who this template is for
Freelancers & solo founders
Handling routine business paperwork without commissioning custom legal drafting for every document.
Small businesses
Standardizing recurring documents — leases, agreements, notices — across a growing operation.
Anyone reviewing before signing
Using a clear starting structure to understand what a document should cover, even if a lawyer finalizes it.
Informal lending & reimbursements
Money changing hands between people or a business and its team, without a bank's paperwork.
FAQ
Is this construction loan disbursement agreement template really free?
Yes — this Construction Loan Disbursement Agreement template on docstoc is free to view, edit online, and download as a PDF with no account or signup required.
What does this construction loan disbursement agreement cover?
This finance template includes 1. Disbursement Method, 2. Draw Request Process, 3. Retainage, 4. Inspection. Fill in the [bracketed] placeholders, edit any clause online, then download a PDF — the docstoc.io footer stays on every export.
Is this legal advice?
No. Financial documents like this can touch usury limits, lending disclosure rules, or tax treatment that vary by state and by amount — details a general template can't know. Have an accountant or attorney review the actual terms before money changes hands based on this.
Can I edit the wording?
Yes — edit directly on the page, adjust any section or clause, and re-fill the 4 placeholder fields to match your situation before downloading a PDF. It's a starting structure, not a rigid script.
Where can I find more free templates like this?
Browse more free finance and related document templates in the docstoc library at /document-templates/.
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