Drawdown

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-01

// THE SHORT ANSWER

A drawdown is the borrower taking money under an approved facility — the whole of a term loan on the first day, or a development loan in stages as the building goes up. Each drawdown is a fresh point of control: the conditions precedent must be met before the first, and on a staged facility every later one waits on its own evidence, typically a quantity surveyor's certificate that the work has been done and that the money left will finish the job. A bank can refuse a drawing while a default is continuing, which is why a breach matters most on a facility that is not yet fully drawn.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.