We Are A Full-Service Business Financing Firm With Consultants
That Specialize In Government Contract Financing.

What is Government Contract Financing?

Government Contract Financing are business financing products provided by lenders that specialize in funding capital to businesses that have won contracts from either a U.S Federal, State, or Local Government offices.

Traditional banks tend to shy away from lending that is based solely on U.S. government accounts receivable,  mainly due to all the rules and regulations contained in most government contracts, and the belief within the industry that collecting from the Government is hard and can take a long time. Many options are available for Government Contractors that are looking for Financing.

The Government's spending will account for roughly one-third of the total U.S. annual GDP. 

What companies could use Government Contract Financing?

Any for-profit business that has a commercial contract for work performed for the U.S. Government, including but not limited to Military base constructions, government schools, and other public infrastructure, etc., as well as services, rendered. Here’s an example of some services for the Government that are eligible for Financing:

1- I.T. and Computer Services

2- Logistics and Transportation Services

3- Military Products and Supply Services

4- Communication Systems Services

5- Construction Services

6- Distributors and Manufacturers Services

7- Engineering Services

8- Temporary Staffing Services

9- Medical Services

The three main Government Contract Financing

Programs that we focus on are:

Government Contract Factoring

Government Contract Receivable Financing

Government Contract Mobilization Funding

What is Government Contract Invoice Factoring?

Government Contract Invoice Factoring is an Invoice Financing product provided by lenders to established businesses and start-ups that have invoices due to federal government contracts. The program allows a company to sell their invoices to a lender to factor.

Instead of a company waiting for 30 to 90 business days or more to be paid for their Government Contract Invoices. A company could factor their invoices for upfront capital of up to 90% of the Government Contract Invoice Value. The lender factoring the company’s Government invoices would take over the collecting process for the full invoice payment.

The balance of the receivables minus the Factoring fees would be remitted directly to the borrowing company once the Government has finally paid the invoice in 30, 60, 90 business days, or sometimes more.


Government Contract Invoice Financing allows businesses the ability to sell their  Invoice/Receivables to a lender,  to factor up to 90% of the invoices face value.  The U.S  Assignment of Claims Act of 1940 allows companies to finance their Government Invoices.

A company that has completed a Government Contract may be willing to sell the invoice from the job to get the capital needed to maintain their business and to take on more than one project at a time. The U.S. Government is an excellent client but one that typically takes 30 to 90 businesses to pay.

If a company wants capital after completing a Government Contract and does not want to wait 30-60 business days or perhaps more to receive payment,  then selling the invoice to a lender to Factor could provide a Government Contractor cash it wants right away. The lender factoring the Government Contract Invoice will handle collecting the payment from the Government agency, who is the payer.

Once the invoice is finally paid, the lender will remit the remaining invoice balance, minus the Factoring fees back to the seller. Government Contract Invoice Factoring is an Invoice Financing product that allows Government Contractors to free up capital needed to bid for multiple contracts at once, competing for lucrative contracts, and cover expenses, without taking on debt instead of selling their completed lucrative Government Invoices. 

Government Contract Invoice Factoring can work with start-up up’s and companies who have limited or no credit history.

Government Contractors are free to select the invoices they want to Factor and amount of capital they want to be advanced per invoice. There are typically no monthly minimums with this product.

Government Contract Financing allows Contractors to take advantage of third-party collection and credit services.

Government Contractors can work directly with our Lenders team of decision-makers. The latter is familiar with the Assignment of Claims and Federal Acquisition Regulations guidelines, which is an element that can cause much confusion and complication when you want to finance Government contracts.

By helping Contractors with the handling of the collections and regulations, Government Contract Invoice/Receivables, Factoring can make it easier for Government Contracts to focus on the other aspects of the customer relationship where they bring the highest value delivering exceptional products and excellent customer support.

Government Contract Invoice Factoring can provide Contracts with a better means to access Working Capital needed to expand

This product could also be used to finance new contract opportunities & cover the long expenses needed to fulfill the existing contracts

Government Contract Invoice Factoring can be used to fund payroll, including mid-month payroll, serve supplier expenditures, and maybe even retire current creditor obligations.

There are a variety of programs and qualifications tailored to small businesses that wish to work with the Federal Government.  The below criteria receive special treatment on specific Federal Contracts:

WSOB – Women-Owned Small Business

HUBZONE – Historically Underutilized Business Zone

8(a) Certified Small Disadvantaged Business

VOSB – Veteran Owned Small Business

SD-VOSB – Service-Disabled Veteran-Owned Small Business

For certain products like, for instance, Government Contract Receivables Financing, lenders may require that the Main Contractor or Nominated Sub-Contractor have at least one (1) year track record.

Eligible businesses must:

  • Operate for a for-profit company 
  • Be engaged in, or propose to do business in, the U.S. or its territories

           registered and active with the U.S. Federal Government Systems Award Management               (SAM)

    • Letter of acceptance from contract awarder Development order or building plan approval from the local authority
    • Detailed costing or Bill of Quantities prepared by qualified Quantity Surveyor Contract documents
    • Layout /Building plan made by the project architect 
    • Contractor/Consultant profiles
    • Contractors registration certificate with CIDB
    • Project Cash Flow
    • Terms of Payment 
    • Contract Summary
    • Location Plan
  • Contract Awarded Profiles [i.e., GLC companies, local authority]

The Federal Acquisition Regulations contain many rules and regulations by which government contractors need to abide. If any are not followed, the Government typically has the right to withhold payment on submitted invoices until the problem is rectified.

Contractors must be able to comply with all systems including but not limited to IDIQ’s, BOAs, Task Orders, GSA Schedule, ENCORE II, SeaPort-e and DHS Eagle,

Even after full compliance with the Act and FAR, lenders’ collateral may be exposed to specific claims from sureties or the contractors’ employees. According to the Miller Act, contractors must furnish individual payment and performance bonds for federal government contracts about the construction, alteration, or repair of a public building or public work. A lender taking an assignment of proceeds from such a contract is credited with knowledge of the Miller Act’s bond requirements. Any surety required to perform under a bond will have superior rights to proceeds from the underlying contract, regardless of an earlier assignment. 

The General Services Administration (GSA) simplifies federal procurement by negotiating large multi-user contracts and by leveraging the volume of the federal market to drive down prices and contract costs.  Without getting into too much detail, there are generally four types of government contracts with multiple executive agencies that provide a borrower with contract revenue.

  1. Fixed-price contracts that require the Contractor to devote a specified level of effort over a stated period for a fixed dollar amount.
  2. Cost-reimbursement based contracts that provide for payment of allowable incurred costs to the extent prescribed in the contract and the contracts specify an estimate of the total cost for the project to obligate funds and establish a ceiling that the Contractor cannot exceed.
  3. Incentive Contracts that are designed to obtain specific acquisition objectives and emphasize improved delivery and better technological performance by relating the amount of profit or fee payable to the contractors’ performance.
  4. Indefinite-Delivery contracts and Time-And-Materials contracts

    All contract revenue billed can be appropriately assigned to the Bank with proper compliance with FACA within the context of FAR.

PARTNERSHIP YOU CAN RELY ON

Our goal is to be our client's trusted business financing partner from inception to the day they sell their business.

SEASONED BUSINESS CONSULTANTS

TGRP Business Consultants are here to offer our clients all of their years of experience in providing capital to companies to grow and expand.

What is Government Contract Receivables Financing?

Government Contract Receivables Financing is an asset-based lending product funded by lenders to only larger and more established companies to provide working capital advance lines on their Government Contract Receivables.

This product is an excellent alternative to Factoring the Government Contract Receivables as the company is taking an advance against the receivables, not selling them to a lender to Factor.  Government Contract Receivables Financing does have a lower advance rate per invoice in comparison to Factoring of 80% to max 85% of the Government Contract Invoice/Receivable value. In exchange for a lower advance rate per invoice, a company gets to maintain the collection relationship with their clients.

All payments from the selected invoice/receivables will be monitored. Once the Government agency finally pays on the invoice/receivable, the remaining balance of the invoice will be remitted to the company minus cost of capital fees. This product works best for growing companies generating a minimum of $500,000 of monthly Government Receivables, with established financial controls that have exhausted their Conventional Business Line of Credit. 


Government Contract Receivable Financing is an asset-based lending product funded by lenders that provide Government Contractors access to a line of credit using the companies accounts receivable as collateral. The invoices billed to the Government for goods delivered or services rendered can be converted into a “Accounts Receivable Credit Line” from which a Contractor may draw capital to better manage the businesses working capital needs from meeting payroll to paying suppliers. 

A Government Contract Receivables line allows contractors to borrow against outstanding invoices while retaining ownership of the receivables. Instead of having to wait anywhere from a net 30 to net 90 business days or more to be paid for their completed invoices. This product can provide a Government Contractor an advance of up to 85% against the face value of an invoice.

In contrast, Factoring involves the Government contractor outright selling their unpaid invoices to a lender at a discount. The receivables aren’t sold, but they will be monitored monthly or quarterly.  Many lenders require contractors to use compatible accounting software, like Quickbooks internally and (SAM), to manage their Government Contracts. All payments from pledged Government Contract invoices must also be diverted to a lockbox account of sorts to track when clients pay.

Almost all lenders will ask to sync with the Contractor’s accounting software. Once the invoice payments are made by the Government, the remaining invoice balance will be sent over to the Contractor minus the cost of capital fees. The lender will adjust the facility higher or lower depending upon how much A/R is available. Therefore this product can grow with Government Contractors as their business grows. Leveraging a Government accounts receivable is an excellent way for Contractors to access working capital. 

Government Contract Receivables Financing allows Contractors the ability to retain control of their accounts receivable collections leading to there being no need to inform clients regularly.

Additionally, Contractors that find factoring to be too difficult and instead handle their own “assign claims” matters from the Government Internally can do so with using this product. 

The rates and fees are generally based on the Government agencies creditworthiness, not the solely based off the Contractors

Government Contract Receivables Financing frees up capital that can be used to bid on additional jobs

Often, companies pass on competing for larger contracts or taking on more than one project at a time, because they are doubtful that they have the financial strength to float the business until the Government pays on the invoices

For companies new in business or for those who do not have excellent credit, it can be challenging to secure a bank loan. Government Contact Receivables Financing offers an alternative.

This product can work with other lending solutions, such as Purchase Order Financing, to provide a full-scale business funding solution.

Government Contact Receivables Financing  can work on Invoices from $500,000 – $10 million+ per month

Almost all Government Contract accounts receivable financing companies link directly with a company’s accounts receivable records to provide fast and easy capital for accounts receivable balances.

There are a variety of programs and qualifications tailored to small businesses that wish to work with the Federal Government.  The below criteria receive special treatment on specific Federal Contracts:

WSOB – Women-Owned Small Business

HUBZONE – Historically Underutilized Business Zone

8(a) Certified Small Disadvantaged Business

VOSB – Veteran Owned Small Business

SD-VOSB – Service-Disabled Veteran-Owned Small Business

For certain products like, for instance, Government Contract Receivables Financing, lenders may require that the Main Contractor or Nominated Sub-Contractor have at least one (1) year track record.

Eligible businesses must:

  • Operate for a for-profit company 
  • Be engaged in, or propose to do business in, the U.S. or its territories

           registered and active with the U.S. Federal Government Systems Award Management               (SAM)

    • Letter of acceptance from contract awarder Development order or building plan approval from the local authority
    • Detailed costing or Bill of Quantities prepared by qualified Quantity Surveyor Contract documents
    • Layout /Building plan made by the project architect 
    • Contractor/Consultant profiles
    • Contractors registration certificate with CIDB
    • Project Cash Flow
    • Terms of Payment 
    • Contract Summary
    • Location Plan
  • Contract Awarded Profiles [i.e., GLC companies, local authority]

The Federal Acquisition Regulations contain many rules and regulations by which government contractors need to abide. If any are not followed, the Government typically has the right to withhold payment on submitted invoices until the problem is rectified.

Contractors must be able to comply with all systems including but not limited to IDIQ’s, BOAs, Task Orders, GSA Schedule, ENCORE II, SeaPort-e and DHS Eagle,

Even after full compliance with the Act and FAR, lenders’ collateral may be exposed to specific claims from sureties or the contractors’ employees. According to the Miller Act, contractors must furnish individual payment and performance bonds for federal government contracts about the construction, alteration, or repair of a public building or public work. A lender taking an assignment of proceeds from such a contract is credited with knowledge of the Miller Act’s bond requirements. Any surety required to perform under a bond will have superior rights to proceeds from the underlying contract, regardless of an earlier assignment. 

The General Services Administration (GSA) simplifies federal procurement by negotiating large multi-user contracts and by leveraging the volume of the federal market to drive down prices and contract costs.  Without getting into too much detail, there are generally four types of government contracts with multiple executive agencies that provide a borrower with contract revenue.

  1. Fixed-price contracts that require the Contractor to devote a specified level of effort over a stated period for a fixed dollar amount.
  2. Cost-reimbursement based contracts that provide for payment of allowable incurred costs to the extent prescribed in the contract and the contracts specify an estimate of the total cost for the project to obligate funds and establish a ceiling that the Contractor cannot exceed.
  3. Incentive Contracts that are designed to obtain specific acquisition objectives and emphasize improved delivery and better technological performance by relating the amount of profit or fee payable to the contractors’ performance.

Indefinite-Delivery contracts and Time-And-Materials contracts

All contract revenue billed can be appropriately assigned to the Bank with proper compliance with FACA within the context of FAR.

COMPETITIVE TERMS

We have custom-tailored options to meet a company's specific needs. TGRP works diligently to provide each client with funding terms that fit their goals.

EXPERT SERVICE

We pride ourselves on going the extra mile for every client that we work with and excel at delivering the capital they desire to grow their business.

Government Contract Financing can work with certified WBE, MBE,
and DBE companies providing cash flow and support

What is Government Contract Mobilization Funding?

Government Contract Mobilization Funding is an Invoice Financing product funded by lenders to companies that have been awarded a Government Contract. The product provides the upfront capital that is needed when a new Government Contract is granted, and the project needs to get off the ground. In some cases, a Government contract may have a mobilization funding module that releases capital that can be used for the mobilization of the contract.

Yet in most situations, Government Contractors end up having to seek some additional Mobilization Financing options. Government Contract Mobilization Funding can provide either an advance against a small percentage of the Contractor or a percentage of the first few months of monthly invoice revenue.

Typically it will be for the lessor of the two options. Mobilization Funding for Government Contractors can be a vital part of being able to deliver on a newly awarded Government Contract. Instead of avoiding bidding on additional or large Government Contracts, look towards Government Contract Mobilization Financing as a means to grow and scale your business. 


Government Contract Mobilization Funding is an Invoice Financing product funded by lenders to Contractors that have been awarded a Government Contract. The product is intended to provide start-up capital to finance the work before the beginning of the project. 

Government Mobilization Funding can deliver either up to 10% of the awarded contract amount or up to four times (4x) the anticipated monthly invoice revenue in the first 120 days of a new government contract. Most lenders will provide funding for the lessor of the two offers to be conservative. 

Government Contract Mobilization Funding can come in the forms of a supplier payment guarantee, a letter of credit, upfront cash payments, or a business line of credit. The most common way is a non-revolving business line of credit. Contractors typically use Government Contract Mobilization Financing to perform tasks essential to begin work on a Government contract, including but not limited to purchasing materials, hiring, training staff for the project, acquiring needed equipment, and payroll for the weeks or months of a Government Contract.

Government Contract Mobilization Funding is paid down by processing the full invoice with the same lender providing the mobilization funding either via Government Contract Invoice Factoring or Government Contract Receivables Financing. As the Invoice payments are made by the Government agency, the mobilization funding portion will be deducted minus the cost of capital fees. Government Contract Mobilization Financing could help Contractors bid for more government contracts by providing the capital needed to rapidly mobilize on a new job before the project gets started. 

Being awarded a new Government Contract can place some Contractors in a “catch 22” situation. Whereby the Contractor needs capital to cover the new project’s expenses before an invoice can be billed and submitted for Financing, and most banks or lenders that Factor needs a completed invoice before issuing Financing.

Government Contract Mobilization Funding provides the “upfront financing” to help cover the cost of new payrolls, materials, supplies, and equipment

This product can help Government Contractors avoid other more expensive options for start-up Financing like credit cards, merchant cash advances, the early draw down of retirement assets, and Fin-Tech high-interest rate funding, Just to name a few other alternative financing options on the market.

With Government Contract Mobilization Funding once the Invoice payments are sent to the lender to Factor or via a lockbox as collateral for a Receivables Financing Line of Credit. The advance funding to mobilize on the project is deducted, thus making it a self-liquidating loan.

The product provides Contractors with access to capital from the start of the project to the end.

Initial funding can be delivered as quickly as in 2-5 business days to the Contractor. 

Government Contract Mobilization Financing focuses less on a Contractor’s possible challenged credit issues or potential balance sheet issues. It focuses more on the creditworthiness of the Government Agency, issuing the invoice. Therefore this product provides Government Contractors with a Pre-check of its customers.

There are a variety of programs and qualifications tailored to small businesses that wish to work with the Federal Government.  The below criteria receive special treatment on specific Federal Contracts:

WSOB – Women-Owned Small Business

HUBZONE – Historically Underutilized Business Zone

8(a) Certified Small Disadvantaged Business

VOSB – Veteran Owned Small Business

SD-VOSB – Service-Disabled Veteran-Owned Small Business

For certain products like, for instance, Government Contract Receivables Financing, lenders may require that the Main Contractor or Nominated Sub-Contractor have at least one (1) year track record.

Eligible businesses must:

  • Operate for a for-profit company 
  • Be engaged in, or propose to do business in, the U.S. or its territories

           registered and active with the U.S. Federal Government Systems Award Management               (SAM)

    • Letter of acceptance from contract awarder Development order or building plan approval from the local authority
    • Detailed costing or Bill of Quantities prepared by qualified Quantity Surveyor Contract documents
    • Layout /Building plan made by the project architect 
    • Contractor/Consultant profiles
    • Contractors registration certificate with CIDB
    • Project Cash Flow
    • Terms of Payment 
    • Contract Summary
    • Location Plan
  • Contract Awarded Profiles [i.e., GLC companies, local authority]

The Federal Acquisition Regulations contain many rules and regulations by which government contractors need to abide. If any are not followed, the Government typically has the right to withhold payment on submitted invoices until the problem is rectified.

Contractors must be able to comply with all systems including but not limited to IDIQ’s, BOAs, Task Orders, GSA Schedule, ENCORE II, SeaPort-e and DHS Eagle,

Even after full compliance with the Act and FAR, lenders’ collateral may be exposed to specific claims from sureties or the contractors’ employees. According to the Miller Act, contractors must furnish individual payment and performance bonds for federal government contracts about the construction, alteration, or repair of a public building or public work. A lender taking an assignment of proceeds from such a contract is credited with knowledge of the Miller Act’s bond requirements. Any surety required to perform under a bond will have superior rights to proceeds from the underlying contract, regardless of an earlier assignment. 

The General Services Administration (GSA) simplifies federal procurement by negotiating large multi-user contracts and by leveraging the volume of the federal market to drive down prices and contract costs.  Without getting into too much detail, there are generally four types of government contracts with multiple executive agencies that provide a borrower with contract revenue.

  1. Fixed-price contracts that require the Contractor to devote a specified level of effort over a stated period for a fixed dollar amount.
  2. Cost-reimbursement based contracts that provide for payment of allowable incurred costs to the extent prescribed in the contract and the contracts specify an estimate of the total cost for the project to obligate funds and establish a ceiling that the Contractor cannot exceed.
  3. Incentive Contracts that are designed to obtain specific acquisition objectives and emphasize improved delivery and better technological performance by relating the amount of profit or fee payable to the contractors’ performance.
  4. Indefinite-Delivery contracts and Time-And-Materials contracts

    All contract revenue billed can be appropriately assigned to the Bank with proper compliance with FACA within the context of FAR.
Federal Contract Spending Grew over 8.5% in 2019, Increasing for the Fourth Year in a row
Agencies spent over $570 billion on prime and unclassified contracts.

What are the Additional Business Financing Options for Government Contractors?

 

Government Contract Work in Progress Factoring can be an excellent product for when a Contractor has work in progress and can not bill the client as of yet to cover expenses. This Invoice Financing product can provide Government Contractors with capital-based off a percentage of the current work in progress they have completed at least a third of the work minus any retainage.

Government contractors have access to a few programs to access credit quickly, but they can also borrow capital over the long term by using Government Contractor SBA programs. The SBA 7(a) program is the most common SBA loan program for government contractors that can provide loans for up to 10 years for working capital and equipment and up to 25 years for Real Estate purchases. 

Bridge Loans are a viable option for Government Contractors to receive capital for contract writers, for bidding, equipment, inventory, or general working capital.  

One of the most flexible financing options for Government contractors can be a Business Line of Credit.

Government financing programs that can be structured whereby the companies receivables and assets serve as collateral for a Business Term Loan.

Equipment can be an integral part of performing on most Government contracts. Government Contractor Equipment Financing can aide companies to acquire the equipment needed to complete a Government Contract job.
 

Standard Interest Rates or Cost

Rates start at 1.5% for 1st 30 days

Typical Underwriting TimeLine

5-10 Business days

Available Capital Limit

Up to $100M per Invoice

Average Term Limits

12 to 24 Months

In closing, Every year the federal Government allocates roughly $500 billion in Government contracts. The federal Government typically awards about 23% of all Government contracts to small and mid-sized business owners. This means that over $100 billion PER YEAR of Government contracts that are on the table. 

Now no one doubts the U.S Government’s ability to pay, Contractors receiving their owed payments are generally assured. On the other hand, the timeliness of payment is the BIG ISSUE. Oftentimes government agencies pay on a predefined payment schedule anywhere from net 30 up to net 90 business days or more. 

These invoice terms are pretty much set in stone and can be challenging to negotiate. When Contractors typically attempt to turn to traditional lending, they state that most banks will not finance a single customer that represents more than 20 percent of a company’s total accounts receivable.

The Government is such a great client to have on the books that most Contractors end up doing more than 20% of their business with the Government. 

The federal Government contracting climate is different from standard invoice factoring. A lot of lenders that Factor may shy away from Government Contract invoices due to the complexities of providing Government work and the difficulty with collecting from the Government agencies at times. 

Our lenders are extremely knowledgeable in current government regulations, compliance requirements, and the details of Government contracting. Troy Business Group has a team of seasoned Business Financing Consultants that specialize in providing clients with access to the best Government Contract Financing options. Please apply online, email us for an appointment, or call us today.  Our team is committed to helping your business grow with Government Contract Financing and will guide you through the loan process each step of the way.

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