How to finance a government contract
Landing a government contract can be an exciting and lucrative development for a small to medium-size business. However, completing the contract does come with a few drawbacks, most notably the all too common problem of slow payment. You know the money is coming eventually, but that doesn’t help when you need strong cash flow right now – especially if you need the financing to complete the project itself. For this reason, it is important to find a way to fill in those financial gaps until the payments finally come through. Here’s how to finance a government contract.
Ways to secure cash flow on a government contract
Before and during a government contract, companies have access to several different financing methods that can help them to keep the cash flowing and ensure that work continues to get done. Four common government contract financing methods are:
- Asset-based lending allows companies to open a line of credit by using selected assets, such as stock real estate or equipment as security.
- Invoice factoring: With this popular method, companies can sell their receivable invoices to a financing company, which then advances between 80% and 90% of the total value, collects payment from the client, and then pays the remainder after deducting its fee.
Kore Capital Corporation specializes in providing short-term capital to small businesses. Contact us or more information on our line of credit, invoice factoring, and other services, as well as on how to finance a government contract.