A drawdown is the act of reducing a party's account by a specified amount. Debt drawdown is the act of slowly issuing funds instead of the entire amount at once. By slowly drawing down the debt, lenders can verify that funds are not misspent before providing more money.
Debt Drawdown Uses
Debt drawdown can be used in large infrastructure projects. The debt drawdown amount is based on the estimated cost of building the project. Debt drawdown loans are used in public, private, and public-private partnership projects.
Debt Drawdown Schedule
Debt drawdown can be restricted to a specific schedule. This schedule can be measured by project completion milestones or percentage of work completed. The debt drawdown schedule also might be set to calendar dates.
Debt Drawdown Restrictions
Money from a debt drawdown may be used only on material, labor and supporting costs of the project for which the loan is intended. Debt drawdown may also be limited to a specific debt-to-equity ratio. Or the money might be allowed to be used only to improve the value of the project or infrastructure being built.
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