What is a progress inspection on a construction loan?

Progress inspection, draw inspection, interim inspection.

The terms overlap, and lenders use them loosely. In practice:

• A progress inspection documents the state of construction at a point in time: percent complete by line item, photographs, site conditions and exceptions.
• A draw inspection is a progress inspection ordered because a draw request is on the desk. The report is read against that request.
• An interim or periodic inspection is a progress inspection ordered on a schedule, for example every 30 to 45 days, whether or not the borrower has asked for money.

The field work is the same. What differs is the trigger and what the lender does with the report.

Why lenders inspect between draws.

A borrower who has stopped requesting draws is not necessarily a borrower whose project is on track. A stale draw, meaning a long gap with no request, is one of the earliest signs of a stalled or troubled project. A scheduled progress inspection surfaces that before the maturity date does.

The FDIC's research on nearly 30,000 multiple-draw construction loans found that banks escalate inspection frequency when local conditions weaken, and that both actual and threatened increases in inspection frequency are associated with fewer defaults. Scheduled progress inspections are the practical form of that monitoring. Supervisors expect it: the FDIC's examination manual treats inspection and disbursement controls as core parts of a bank's construction lending program, and the NCUA's examiner guide reminds credit unions that collateral value on a construction loan is created only as the improvements go in, so disbursements have to track real progress.

Why it matters for lenders.

Frequency is a policy decision, and it should be written down: which projects get calendar inspections, at what interval, and what triggers an off-cycle visit. Documenting that policy, and the inspections that followed it, is what turns monitoring into a defensible record.

How RAZE handles it.

RAZE treats a draw inspection and a scheduled progress inspection as the same order type with a different trigger. Lenders create either one in the Ordering Engine, set the required deliverables, and route it to their own inspectors or to RAZE Marketplace coverage. Every visit produces the same standardized report in the Inspector Portal, so an off-cycle inspection in April reads exactly like the draw inspection in March. See how the full workflow runs on the draw inspections page.