Every year, the government awards billions of dollars worth of contracts to private companies throughout the United States. While that brings income-generating opportunities for a diverse range of companies, it can also present some financial challenges.
Some businesses can struggle to cover the costs associated with delivering the contract while still funding ongoing projects and operations. Others find the personnel required to complete the contract expensive, particularly when they have to wait up to 120 days for their invoices to be paid.
The result can be working capital problems that effectively paralyze the company and stall its growth. That’s where government contract factoring and solutions can help.
What is Government Contract Funding?
Government contract funding gives private companies, particularly small and medium-sized businesses, a way to access the money they need to sustain their operations while delivering government contracts. That helps to prevent a situation where you win a bid but are not able to fulfill it for financial reasons.
There are negative consequences associated with defaulting on a government contract. That’s why it’s so important that you explore your government contract factoring and funding opportunities early on.
What are Your Options?
At Porter Capital, we offer several government contract funding solutions to help you overcome the specific financial challenges that your business might face. That includes:
1. Government invoice factoring
Invoice factoring helps businesses to eliminate the cash flow problems that result from the slow-paying of government invoices. Rather than waiting 30, 60, 90 or even 120 days to get paid by the government, you’ll receive an advance payment that’s worth up to 90% of the value of an invoice within just 24 hours of it being issued. You’ll receive the balance of the invoice when it is paid by the government, minus a small fee.
Qualifying for government invoice factoring with Porter Capital is easy. The government might be a slow payer but it’s very reliable. That removes any concerns we may have about the creditworthiness of your customers. A funding line can be set up quickly and it’s also very flexible, as the advance payment you receive will grow as your revenues from government projects increase.
2. Supply chain financing
If you manufacture goods directly or want to build up your inventory and need to pay suppliers, supply chain financing could be the most appropriate funding solution for you. Supply chain financing is well suited to mid-sized manufacturing companies and distributors with government purchase orders.
In this type of agreement, Porter Capital will extend credit to your company and buy the products from your suppliers on your behalf. Once the order is fulfilled, we invoice your company for the products. The transaction is then settled when the invoice is paid.
One of the main benefits of supply chain financing is that it works well with your existing financing, allowing you to extend your capabilities and fulfill more orders.
3. Asset-based lending
Larger businesses that cannot qualify for a conventional line of credit may be able to benefit from a government contract funding solution such as asset-based lending. This funding option allows you to raise money against company assets including inventory, equipment, vehicles, and accounts receivable. The type of funding that’s available can come in the form of lines of credit or term loans and will be based on the value of the underlying asset.
At Porter Capital, this type of solution is often used by small to medium-sized government contract companies that need to cover short-term cash flow demands. For example, a business may need a quick line of credit to cover its payroll expenses while it waits for a government invoice to be paid. One of the benefits of this type of funding is that the interest rates tend to be lower than unsecured loans as the lender can recoup its losses if the borrower defaults.
The Government Contract Factoring and Funding Specialists
At Porter Capital, we have more than 30 years of experience funding businesses just like yours. As specialists in government contract funding, we will work closely with your business to tailor a cost-effective funding solution that meets your specific needs. Our rates are among the very best in the industry and you’ll receive outstanding customer support throughout the process.
Get in touch to discuss your government contract funding requirements today.