Retainage is a percentage — usually 5% to 10% — that your lender (or you, with your subs) holds back on every draw until the project is complete. It exists to make sure work gets finished, but it creates a cash-flow gap most builders underestimate.
How retainage works on a draw
If you complete $100,000 of work and retainage is 10%, the draw funds $90,000. The held-back $10,000 is released at project completion, once final requirements are met.
DrawReady accounts for retainage on every line so your draw totals match what the bank will actually fund.
Stop chasing draw documents.
DrawReady shows you what’s missing before you submit.
Start your 30-day free trialPlanning for the retainage gap
- Know your retainage percentage before you start
- Assume every draw funds short by that percentage
- Keep working capital to cover the gap through the build
- Track the held-back total so your final draw is correct
| Work completed | Funded now (10% retainage) | Held back |
|---|---|---|
| $50,000 | $45,000 | $5,000 |
| $100,000 | $90,000 | $10,000 |
| $250,000 | $225,000 | $25,000 |
Frequently asked questions
When do I get retainage back?
At substantial or final completion, once the lender’s closeout requirements — final lien waivers, final inspection — are met.
Do I hold retainage on my subs too?
Often yes, mirroring what the bank holds on you, so your cash-flow stays aligned.
Related reading
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Lien waivers on construction draws
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Ready to get your next draw bank-ready?
Your project shouldn’t stop because your draw isn’t ready. DrawReady checks it before it reaches your lender.