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Draw Shortfall Calculator
Construction draws often fall short of paid invoices due to retainage, non-reimbursable costs, or timing. This calculator sizes the shortfall and equity needed.
Draw shortfall (equity required)
$108,500
Draw amount received
$391,500
Retainage withheld
$50,000
Non-reimbursable amount
$15,000
How the math works
Draw shortfall = invoice − advance amount. Retainage, non-reimbursable costs, and sub-100% advance rate all cause gaps.
Sponsors should reserve 15-20% equity above lender budget to cover shortfall. Mid-project cash crunch is the #1 construction failure mode.
How to Use
- Enter invoice submitted for draw.
- Enter advance rate %.
- Enter retainage %.
- Enter non-reimbursable %.
- Read draw amount and gap.
Frequently Asked Questions
Why is shortfall common?
Lenders advance 80-90% of approved costs. Retainage holds back 5-10%. Non-reimbursable items (late fees, change orders pre-approval, markup) don't advance. Gap = equity required.
Typical shortfall?
10-20% of invoice total is typical. On $5M of draws, that's $500k-$1M out of equity pocket. Sponsors who don't reserve equity for shortfall run out of cash mid-project.
How to manage?
Size equity reserve at 15-20% above lender-approved budget. Pre-approve change orders. Use a draw schedule reviewed quarterly. Build relationship with lender for flexible draw timing.
Who owns this risk — sponsor or lender?
Construction risks are typically shared: hard-cost overrun owned by sponsor (via completion guaranty), soft-cost and delay risks shared per contract, force-majeure excused but bears owner carry cost. Document risk ownership in the loan agreement and GC contract before closing. Disputes get expensive when roles are unclear. Institutional deals spell out every allocation in writing.
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