For loans with a construction reserve, interest is computed either on (i) the full loan amount (also known as “Dutch Interest”) or (ii) on the loan proceeds that have already been disbursed directly to the borrower (also known as “Non-Dutch Interest”). PeerStreet’s final approval is required prior to the disbursement of construction draws. PeerStreet, or the original lender, typically hires a third party to conduct inspections for draw requests. Once the third party inspects the work completed by the borrower, they submit a report to PeerStreet with a recommendation on whether or not to fund the draw. PeerStreet then reviews the report and typically collects either a lien release or a conditional lien release for the completed work, and approves funds to be drawn.
