Government Contractor Loans: Financing Options for Government Contractors
Government contract financing is an effective way to fund your operational costs as you do business with the federal government. As the government grants billions of dollars of contracts to small and large companies across the country, many of these businesses need to find ways to finance their business.
There are many challenges, but also many benefits, to doing business with the government. There are some contracts open to unique businesses – like those owned by women, minorities or veterans. There are also a variety of opportunities available, and other businesses are often impressed by and excited to work with those who have worked with government agencies in the past. And once completed, a government contract offers money businesses can rely on to continue growing.
As business owners consider government contracts, there are many things to consider. Here are some of the problems and financing options available to government contractors.
Financial problems government contractors may face
It can be exciting to be granted one of these coveted government contracts, but some businesses run into financial problems and challenges once they begin work. These may include:
- Difficulty with vendor payments while awaiting government pay: Many businesses pay their vendors and suppliers when they receive the goods or services, so they must be able to pay the vendor up-front before receiving money from the government contract for the goods or services needed to complete the contract.
- Slow payments resulting in cash flow issues: Because government agencies have specific invoice payment plans, it may cause a delay in businesses receiving payment after completion of the contracted project. A business may have to wait up to two months to receive payment, but must also be able to pay its own bills and employee salaries while awaiting the payout from the project.
Funding options for government contractors
As a government contractor, there are many ways to secure financing for your project so you can get to work on the agency’s needs. Here are options that can fit your unique needs with your government contract:
SBA loan: If you own a small or medium sized business working on government contracts, then you may be eligible for SBA loans, which are administered by the Small Business Administration. Many small businesses opt for these loans because they may not qualify for traditional loans, but these loans come in a variety of sizes and repayment terms.
Fixed term loan: As a business, you can borrow a sum of money and make fixed payments over a specific period of time. Repayment periods and rates may vary but once you are locked in to the loan, repayment budgeting can be easy for many businesses. This type of a loan often allows business owners to use their cash flow where they most need it.
Unsecured loan: Unsecured loans can be easy and fast to get. They are granted on credit, rather than collateral, and give businesses flexibility to use the funds from their unsecured loan however they need.
Business line of credit: This option gives businesses access to funds and flexibility as to how and when to use the funds. Much like a personal credit card, business lines of credit are a pool of money to use whenever needed within the limits and paid back over a fixed timeframe. Many times, larger businesses opt for this funding option as it comes with a lot of flexibility.
With choices for funding options and financial institutions to provide government contractors with financing during projects, business owners need to consider their needs and repayment abilities. The size of the business, the specifics of the government contract and the other contracts or clients the business has are all considerations one should look at when reviewing funding options. As you weigh your options, you don’t have to do it alone – reach out for help or questions about any of these business loans.
Fast Track Lenders LLC provides multiple financing options for Government Contract Loans. Be financially prepared for upfront and ongoing costs.
Work with Fast Track Lenders for your government contractor financing
Applying for a loan with Fast Track Lenders is easy! We offer government contractors and other business owners loans with flexible, competitive terms, renewal options and no prepayment penalties. You’ll have a dedicated advisor to answer all your loan questions, so you won’t get lost or confused with the process.
You can pre-qualify for a loan with a no-risk application. Just apply online in minutes, and it won’t affect your credit score. Then, you’ll get your approval quickly and have working capital within 24 hours so you can continue to get the job done. Get started with an application today.
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