Loan Programs · 6 min read
Bridge the Construction Draw Gap: Get Your Building Materials Now and Pay Later
August 17, 2026
For real estate investors, builders and developers, getting a construction or renovation loan is often only half the battle.
The other half is managing the construction draw process.
Many fix-and-flip and construction loans operate on a reimbursement model. The borrower completes work, pays expenses out of pocket, requests a draw, waits for an inspection and approval, and then receives reimbursement from the lender.
That process works—but it can create a significant cash-flow gap.
What happens when you need $20,000, $30,000 or $50,000 worth of lumber, flooring, cabinets, appliances or HVAC equipment today, but your next construction draw won't be available until after the work is completed and inspected?
That's exactly the problem Lulu Capital's Construction Material Funding Program, or what we like to call Draw Gap Financing, is designed to solve.
What Is Draw Gap Financing?
Draw Gap Financing provides qualified real estate investors, builders and developers with access to short-term financing specifically for eligible construction materials.
Instead of using your own cash to purchase materials and then waiting to be reimbursed through your construction lender's draw process, the program can pay an approved commercial supplier directly.
You receive the materials you need to keep the project moving and can select an extended payment term of 30, 60 or 90 days.
In other words:
Get the materials now. Keep your cash working. Pay later.
Why Construction Draws Create a Cash-Flow Problem
Construction lenders typically want to verify that work has been completed before releasing additional rehabilitation or construction funds.
That can mean:
Completing a stage of construction
Paying contractors or suppliers
Requesting a draw
Scheduling an inspection
Waiting for the inspection report
Waiting for lender approval
Waiting for funds to be released
Meanwhile, your next supplier may want to be paid before delivering another $25,000 worth of material.
The project can quickly reach an awkward point where the money is technically available through the construction loan—but you can't access it until you first spend money you already have.
For an investor working on one project, that's inconvenient.
For an investor trying to operate several projects simultaneously, it can become a serious constraint on growth.
How Lulu Capital's Construction Material Funding Works
The process is relatively straightforward.
1. Select Your Supplier
Identify the construction materials you need from an approved commercial supplier or supply house.
2. Submit the Vendor Invoice
Provide the final vendor invoice along with the required project and underwriting documentation.
3. The Vendor Gets Paid Directly
Once approved and all required documentation has been received, eligible vendor invoices can typically be paid directly to the supplier within approximately 24 to 72 hours.
4. Your Materials Are Delivered
The supplier delivers the materials for your construction or renovation project.
5. Repay on Your Selected Term
Choose a 30-, 60- or 90-day payment term, with repayment made through automatic ACH.
That gives you time to continue construction, complete your next draw milestone, receive reimbursement from your existing lender or otherwise manage the project's cash flow without unnecessarily tying up your liquidity.
Basic Program Guidelines
While every transaction is subject to underwriting and final approval, here are some of the general program parameters:
Project Budget: Up to $300,000
Individual Material Orders: $3,000 to $50,000 per order
Maximum Outstanding Balance: Up to $50,000 at one time
Payment Terms: 30, 60 or 90 days
Principal Guarantor Credit: Generally 720+ FICO
Vendor Payment: Typically within approximately 24–72 hours after approval and receipt of final required documentation
Project Setup Fee: $599
Repayment: Automatic ACH
Pricing is based on the payment term selected. The program includes a minimum 30-day term, and qualifying invoices paid between days 31 and 89 may be eligible for an early-payment benefit based on unused days.
What Types of Projects Can Qualify?
The program is designed for business-purpose construction and renovation projects, including:
Fix-and-flip renovations
Single-family investment properties
Multifamily properties
Mixed-use properties
Commercial properties
Ground-up construction
Other qualifying renovation and development projects
Existing mortgage liens on the property are permitted, and projects purchased with cash may also qualify.
That makes the program potentially useful whether Lulu Capital financed the underlying acquisition or construction loan or another lender is already in place.
What Can Be Financed?
This program is specifically designed for physical materials and supplies, not general construction expenses.
Eligible purchases can include:
Lumber
Concrete
Drywall
Flooring
Cabinets
Tile
Plumbing supplies
Electrical supplies
Roofing materials
Appliances and kitchen equipment
HVAC and heating/cooling systems
Other qualifying raw materials and physical building supplies
Eligible vendor delivery charges
Depending on the purchase, up to 100% of an eligible material vendor invoice may be financed, subject to program limits and underwriting.
What Isn't Eligible?
This isn't a general-purpose working capital line.
The program does not finance:
Labor
On-site workers
Contractor fees
Professional services
Permits
Legal fees
Architectural fees
Other soft costs
Sales tax
Sales tax must generally be paid by the customer at the time of purchase.
The distinction is simple: the program is designed to fund the physical materials going into the project.
Why Investors May Want to Use Draw Gap Financing
The obvious benefit is eliminating the need to front large material purchases while waiting for construction draw reimbursements.
But the bigger advantage may be what happens to the cash you don't have to spend.
Preserve Working Capital
Instead of putting $40,000 into cabinets, flooring and HVAC equipment, you may be able to keep that $40,000 available for labor, unexpected repairs, change orders or other operating expenses.
Keep Construction Moving
Waiting for a draw can cost more than money.
It can cost time.
Crews standing around because materials haven't arrived don't help anyone. Neither does pushing a project schedule back because the next shipment couldn't be ordered.
Material financing can help bridge that timing gap.
Keep Cash Available for Your Next Deal
Real estate investors don't only need liquidity for the project they're working on today.
They also need capital for tomorrow's opportunity.
Keeping cash out of material purchases may leave more liquidity available for:
Earnest money deposits
Down payments
Appraisals
Closing costs
Assignment fees
Equipment
Another acquisition
For investors trying to scale from one active project to several, cash-flow management can be every bit as important as finding the next property.
A Simple Example
Suppose you're renovating a single-family investment property with a total project budget of $250,000.
You need approximately $40,000 of flooring, cabinets, appliances and HVAC equipment, but your construction lender won't release the next draw until another milestone has been completed and inspected.
Rather than writing a $40,000 check and waiting for reimbursement, an approved Draw Gap transaction could pay the qualifying supplier invoice directly.
You obtain the materials, continue the project and select a repayment term designed to better align with your anticipated construction draw or other repayment source.
Your working capital remains available for the expenses that can't be financed through the material program.
That's the gap this product is intended to fill.
Is Draw Gap Financing Right for Your Project?
It may be worth considering if you're a:
Fix-and-flip investor
Real estate investor
Residential or commercial developer
Construction builder
General contractor
Property owner completing a business-purpose renovation
It can be particularly helpful when you already have a construction or rehab loan but don't want to continually use your own cash to bridge the time between material purchases and lender reimbursements.
Have a Project? Talk to Lulu Capital
If you have an upcoming construction, renovation or fix-and-flip project and need to purchase materials before your next construction draw is available, talk to Lulu Capital before tying up more of your own cash.
Send us the basics:
Property location
Property type
Total project budget
Materials needed
Estimated material invoice amount
Preferred supplier
Desired 30-, 60- or 90-day payment term
We'll review the scenario and determine whether our Construction Material Funding / Draw Gap Financing Program may be a fit.
Keep the project moving. Keep your liquidity available. Let Lulu Capital help bridge the draw gap.
Program guidelines are provided for informational purposes only. Terms, pricing, availability and credit requirements are subject to change. All transactions are subject to underwriting approval, program limits and final contractual agreements.