Avoiding Delays: Common Pitfalls in Construction Loan Closing

In real estate development, timing is everything. Whether you're rehabbing a triple-decker or breaking ground on new construction, delays in your construction loan closing can throw off your entire schedule. Contractors start asking questions. Material costs creep up. Holding costs pile on. And before you know it, your budget’s already feeling the heat.

The thing is, most slowdowns aren’t caused by something major. They come from little things—loose paperwork, unclear budgets, missed details. Stuff that’s easy to overlook when you’re juggling bids, blueprints, and inspections. But with the right prep, a lot of these headaches are avoidable.

Let’s walk through the most common pitfalls we see that hold up loan closings, and how to stay a step ahead.

Loan Closing: The Real Starting Line

Before a single nail gets hammered or a backhoe touches dirt, your loan closing has to be complete. It's the switch that powers up the project. No closing? No funds. And without funds, you’re stuck. Can’t order materials. Can’t pay the crew. Can’t get going.

But here’s the part many people miss: loan closings can stall easily. One missing document, one vague line item in your budget, one overlooked permit, and the lender hits pause. Suddenly, you're scrambling to fix it while everything else waits.

What Trips Up a Construction Loan Closing?

Vague Plans and Budgets

Your lender isn't just handing over a check; they're backing a project. So they need to see exactly what you're building, how much it’ll cost, and what the finish line looks like. If your scope of work is fuzzy or your contractor bids aren’t clearly laid out, expect delays. They need to know where the money’s going, and if they have to guess, they’re not moving forward.

Permit Problems and Missing Insurance

Here’s a common one: everything’s lined up... except your permits are still “processing.” Or maybe your builder’s risk insurance isn’t tied to the right address. Small things, but they stop everything cold. The fix? Start your permit process early. Double-check that all insurance policies are current and specific to the job. No assumptions—just clean paperwork.

Entity Confusion and Financial Gaps

If you're borrowing through an LLC or partnership, your lender needs to know exactly who owns what and who’s allowed to sign. Messy operating agreements or missing ownership documents can grind things to a halt. Same goes for financials. Unclear income, outdated bank statements, liens no one mentioned... it all raises red flags. A quick check-in with your CPA or attorney before submitting the package can save you a week or two later.

A Draw Schedule That Doesn’t Make Sense

The draw schedule is your lifeline. It tells your lender when to release funds as your project hits specific milestones. If it’s too broad or doesn’t match your contractor’s billing, that disconnect can cause delays. Keep it grounded in real construction stages: framing complete, windows installed, HVAC rough-in done. The closer your draw schedule mirrors what’s happening on-site, the smoother it goes.

Keeping Things on Track

There’s no magic to fast loan closings. It’s about showing up ready.

Have your paperwork tight from the start. Make sure your numbers add up. Let your lender know early if anything might shift—weather, permitting, a supplier going MIA. Work with contractors who’ve done this before and understand how draws work. And always, always build in a bit of breathing room. Construction never goes exactly to plan, but the better your prep, the less it matters when something does shift.

Final Thought: Slow Closings Can Cost You More Than Time

In a competitive market, delays are both frustrating and expensive. They can cost you the deal, your momentum, or the next opportunity lined up after this one.

So don’t just chase speed—plan for it! Understand your lender’s process, tighten up your loan draw schedule, and knock out that checklist before it gets in your way.

If you’re looking for a lending partner who moves as fast as you do, we’ve got you. At Boston Trust Corp, we help real estate investors across Greater Boston close quickly, fund flexibly, and stay ahead of the curve.

Call 617-752-7000 to talk with a local team that knows how to move.

Let’s get your project moving.