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

What is Government Contract Financing?

Government Contract Financing is 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. 

Which 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- 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 Factoring?

How Does Government Contract Invoice Factoring Work?

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.

What Are The Benefits Of Government Contract Invoice Financing?

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.

WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR GOVERNMENT CONTRACT FINANCING?

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)

HIGH APPROVAL RATES

Funding decisions based on actual business performance. TGRP can find a solution for you.

COMPETITIVE RATES

Tailored terms to meet your needs. TGRP is only interested in positioning your business for success.

What is Government Contract Receivable Financing?

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)

A RELATIONSHIP YOU CAN TRUST

TGRP has worked with thousands of businesses since 2012. We strive to build relationships that last.

EXPERT FUNDING ADVISORS

From initial application to future funding needs, your dedicated loan officer is here to help you and your business.

What is Gov Contract Mobilization Funding?

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 drawdown 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.

Don’t Fit The Criteria? Don’t Worry.

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.

Government contractors have access to circling credit programs but 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.

Bridge Loans are a viable option for Government Contractors to receive capital for contract writers forbids, 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.

“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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