Construction lending exists wherever capital is released in stages against verified progress on residential real estate. This workflow is performed annually primarily by three lender types listed below. There is an additional ~$57B construction payments handled in cash, totaling ~$917B in total capital flow to construction.
| Lender type | Annual construction lending | Number of firms in USA |
|---|---|---|
| Banks | ~$463B | ~4,380 |
| Credit unions | ~$284B | ~4,330 |
| Non-bank lenders | ~$146B | ~11,400 |
| Total | ~$860B | ~20,000 |
Regardless of lender type, construction lending is defined by workflow, not firm type.
All construction loans follow the same operational phases:
Origination and budget approval (origination)
Loan approved with a line-item construction budget that contractually governs future disbursements.
Conditional capital commitment (servicing)
Funds are held back and released only after verified progress.
Draw management and verification (servicing)
Borrowers submit draw requests, inspections validate work, and lenders approve or reject disbursements.
Payments, reconciliation, audit, and compliance (back office admin)
Funds are released, balances are updated, and records must support audits, regulators, or capital markets buyers.
This workflow does not change across banks, credit unions, or non-bank lenders.
Operating model:
Tools actually used: