What are Government Contracts?

Government contract financing solves the cash gap built into federal, state, and local contracts. The government does not pay deposits, expects you to fund production yourself, and the payment clock does not start when you deliver — it starts when the contracting officer formally accepts the delivery. Sixty days from acceptance, not from delivery, is normal. A single order can mean roughly 60 days of production funding plus another 60 days waiting for payment. Staggered deliveries — which most government orders are — repeat that cycle for each batch.

The structure we use for most contracts is a combined facility under one roof: purchase order funding covers production, and an invoice line takes over at delivery to pay the PO lender off and wait on the government check. The result is a single revolving line built around government receivables.

For businesses where every dollar of revenue is government work, we go to specialist lenders who focus exclusively on government contracts. They know how to handle assignment of claims, work with contracting officers, and structure around acceptance cycles. Subcontractors working under a prime contractor are the most underserved part of the market — most lenders will not fund them because the payer is another contractor, not the government directly. We have access to lenders who specifically structure for subcontractors and can fund against the prime's commitment.

A few practical notes. Setup for government accounts takes longer than commercial — assignment of claims and contracting officer sign-offs add three to four weeks. For uneven billing with milestones and quiet stretches, we usually structure a true facility with a small unused-line fee rather than spot funding. Government slow-pay of 30 to 45 days is normal — the point of the facility is to make that rhythm survivable.