Top 5 Contract Financing Solutions
When it comes to funding a small business, sometimes your best bet is contract financing. What many business owners don’t realize is that an extremely effective way to do this is to put in a bid for a government contract. As long as your business provides services or goods needed by the government, you’re likely to be able to acquire funding this way. Contract financing can be obtained in several ways, so you’ll need to determine which is best for your business.
If you a small to medium-sized business you can turn to the SBA for a loan. Your options include microloans if you only need a small amount of money. At the most, you will get a loan in the amount of $50,000. When you are launching a new business and need a financial boost, this one is likely your best option. For larger businesses, the better choice is a 7(a) loan known as a CAPLines. This loan can get you as much as $5 million.
Obtaining money through invoice financing is another viable option. This provides you with more flexibility than an SBA loan would. It is a line of credit that can only get larger based on any government projects that bring in revenue for your business. The biggest benefit of invoice financing is that you can get the contract financing quickly.
Purchase Order Financing
When you obtain purchase order financing you’ll be able to use it for the supplies you need in order to complete government projects. This is the best funding option for businesses that purchase needed items from wholesale retailers. And while it’s ideal for these purchases, it should be noted that manufacturing companies never use purchase order financing.
Supplier financing is also a commonly used form of acquiring funds. For small to medium businesses that are struggling to pay their suppliers, this is the best option. In order to obtain this type of financing your business has to have been running successfully for a minimum of three years.
For more information on contract financing please contact Diamond Capital Financing.