Key Takeaways for Smooth Loan Disbursements 

To ensure your construction funds are disbursed quickly and accurately, remember these three essentials: 

• Dual Verification is Key: Both the borrower and Live Oak’s Construction Specialist must approve all documentation before payment is released. 

• Time is of the Essence: It generally takes 7-10 business days to process a disbursement request once we have all the required paperwork. 

• Lien Waivers are a Must: We require lien waivers from the general contractors (GCs), all subcontractors, and major material suppliers to ensure the project is free of liens. 

You’ve selected your GC and broken ground! Now, the next step is understanding how the money moves to fund your build, known as the loan disbursement. Getting the disbursement process right is essential for maintaining your project timeline and keeping your subcontractors paid and happy. In the world of commercial construction lending, clear payment policies are the heart of a smooth project. 
 

At Live Oak, we believe this process shouldn't be complicated. We use a dual verification process to protect your investment and ensure every payment is compliant. This guide will walk you through our straightforward policies, explain key terms like retention and lien waivers and detail the steps required to receive a payment, keeping your project on track from paper to final product. 

How We Process Your Construction Disbursements 

We’ve designed our process to be clear, compliant and easy to follow. Our dual verification system protects you by ensuring the work you’re paying for aligns with the contract and is properly documented. 

Before any funds are released to your general contractor, we follow a two-step approval process known as the dual verification process: 

1. Borrower Approval: The contractor submits the payment documentation, and you, the borrower, must first approve it. 

1. Live Oak Bank Review: Our Construction Specialist then reviews the approved documentation to confirm compliance with all bank requirements. 
   

Once verified, disbursements are typically made on an as-needed basis, negotiated with the contractor and generally not to exceed one per month, unless otherwise agreed upon. It’s important to plan for a 7-10 business day turnaround once all necessary documentation is received. 

Understanding Payment Mechanics 

Payments are calculated based on the progress of your project, assessed by a third-party expert. 

• Basis for Funding: Individual line items (including overhead and profit) are funded based on the overall percentage of completion as assessed by Live Oak’s party inspection consultant. 

• Itemization is Required: Payments must be itemized and detailed in a line-by-line cost breakdown/schedule of values. 

• Retention Policy: We typically hold 10% retention on all payments (including labor and material) unless otherwise approved or mandated by the state. 

• Deposits: All deposits must be approved by Live Oak at its sole discretion, and any approved deposits will be paid directly to the vendor. 
  

We reserve the right to determine the method of disbursement based on information provided by the contractor or the type of project being financed. Rest assured, both you and the contractor will be notified of the selected method before the initial disbursement. 

Required Documentation to Release Funds 

To ensure smooth processing, a comprehensive set of documents must be current and received before each payment is released. The absence of just one item can halt the disbursement, so it's necessary to stay organized. 

Protecting Against Liens and Risk 

This paperwork protects your investment by verifying that the work is free of financial claims and that the project is compliant. 

• Title Search If applicable, a title search will be received prior to each disbursement and must be free of liens. 

• Insurance and Licenses All required insurance and licenses must be current prior to each disbursement. 

• Lien Waivers This is key! A lien waiver document serves as a form of receipt and eliminates the possibility of a mechanic’s lien from being filed. We require lien waivers from the general contractor, all subcontractors and major material suppliers. 

• • A conditional lien waiver is required from the general contractor for each progress payment. 
  • An unconditional lien waiver is required from all subcontractors and major material suppliers for work completed on previously paid progress payments. We can accept certified electronic signatures on subcontractor and vendor lien waivers collected by the GC. 

Final Payment Checklist

The project's finish line is an exciting moment! Final payment will be issued upon receipt of three critical items: 

• The certificate of occupancy.
• All lien releases.
• A signed-off punch list.

A successful construction project requires more than just a great plan. It demands clear and consistent financial execution. By understanding and complying with Live Oak's payment procedures, you empower our team to disburse funds quickly and efficiently. 

We're here to be your confident, adept partner throughout the build. By maintaining clear communication and submitting complete documentation, you’ll ensure a steady flow of funds and keep your project on its planned timeline and budget. 

Have questions about your disbursement schedule or need clarification on lien waivers? Contact your Live Oak Construction Specialist today to review your project's specific payment process or view our robust Construction Payment Policies & Processes document here. 

FAQs

Q: How long does it take to get a construction loan disbursement? 

A:  Once we receive all necessary documentation, it takes 7-10 business days to process a disbursement request. Making sure you and your contractor submit a complete package right away is the best way to keep things moving.

Q: What is retention and why does Live Oak Bank hold it? 

A: Retention is when we hold back 10% of all payments (including labor and material). We hold this money to ensure all work is completed to satisfaction and to protect against potential liens, releasing it after the project is finished and all required final documents are submitted.

Q:  Why does the bank need lien waivers from my subcontractors? 

A:  We require lien waivers from the GC, all subcontractors, and major material suppliers because it’s the best way to confirm that everyone who contributed labor or materials to the project has been paid for their work and cannot place a lien on your property. This protects your title and your investment.