Structuring · 6 min read
Staged drawdown: how milestone funding protects both sides
Project money is released against certified progress. A well-built drawdown schedule keeps the site working; a badly built one strands a project between tranches.
September 6, 2026
Key takeaways
- Each tranche has its own conditions precedent, not just the first.
- Milestones must be objectively verifiable by a third party.
- Interest accrues only on funds actually drawn.
- Schedules should allow lead time between certification and payment.
Why lenders tranche
Advancing the whole facility on day one would fund an asset that does not yet exist, and would charge the sponsor interest on money sitting idle. Releasing in tranches ties cash to verified progress, limits exposure at every point in the build, and keeps the sponsor's financing cost proportional to what has actually been deployed.
What makes a good milestone
A milestone should be something an independent engineer or monitoring surveyor can certify without judgement calls: foundations complete, structure topped out, plant delivered to site, commissioning tests passed. "Substantially progressed" is not a milestone.
Conditions precedent apply to every tranche
First drawdown usually carries the heaviest conditions — executed facility agreement, security registered, insurance in place, verified beneficiary account. Later tranches carry lighter but real ones.
- Certificate from the independent engineer or monitoring surveyor.
- Evidence that the previous tranche was spent as budgeted.
- Confirmation that no default or material adverse change has occurred.
- Updated cost-to-complete showing the remaining budget is still sufficient.
Building a schedule that works on site
Contractors are paid on their own cycle, and certification takes time. Build a lead time between the certification date and the payment date into the programme, and keep a contingency tranche available for the overrun that most projects meet at least once.
Funds are paid to the verified beneficiary account through our corresponding financial institution, in local currency where the receiving bank supports it.
Discuss your project with the lending desk
Facilities from $250,000 to $50,000,000, with terms to 240 months. Underwriting responds within 24–48 hours of a complete submission.