Overview · What & why
A decision, before a calculation.
Development spends money before the asset produces stable income. A construction facility advances funds as eligible costs are incurred, while equity funds the remaining requirement. Interest depends on outstanding principal and elapsed time. The draw schedule therefore links physical progress to financing cost; a delay after most of the loan is drawn can be expensive.
A concrete example
A fully drawn $8M balance at 6% costs $40K monthly in simple interest. Six additional months add $240K, before extensions, inflation or lost rent. Early delays with a smaller balance can have a different carry effect.
What to remember
A schedule is a financial assumption, not just a construction graphic.
Before using this in a project: Monthly cost plan, eligible-cost rules, advance timing, loan fees, rate and interest funding convention.