Lenders Charging Interest on Holdbacks

[Ronnie Darby]

I deal mostly with hard money/private lenders (not sure if that changes the answer):

My first flip involved all of the money at closing, but for this one the lender is disbursing funds as I progress. They're telling me interest is charged on the FULL loan amount, even though I only get about 60% of that at closing. I've done the math and the effective rate is over 20%! They said this is "industry-standard" and "all serious lenders do it".

Is this "standard" based on others' experience? Do most lenders do it? Some? Very few?