Commercial & Government Construction Financing Options
Becoming a government contractor has very many advantages. The government gives incentives to small businesses to work with them. Getting financing from the government can be very helpful. There are various types of financing options in this case. One of the options is factor slow-paying invoices. There is a factoring program in this case that allows you to finance slow-paying invoices. In this case you dont have to wait for the government to pay. You will be able to get an advance from the factoring company in this case. The transaction is concluded the moment the government pays the invoice. With government invoices you can be allowed to assign the proceeds of the invoice. You will pay them to a third party who will now give the funding.
Finance purchase orders is another financing option. Small businesses work with vendors and they have to make payment. This is actually before you ship the product. If you have a large order, this demand can be a great problem. This is because you might not have enough money to cover the payment. This is where you might actually consider financing the government purchase order. This funding normally pays all supplier costs. You should ensure that these costs are associated with a specific order. In this case you will be able to purchase products and fulfill the order. The transaction is concluded the moment the government receives the goods and pays for them.
Another finance option if financing your supplier payments. This applies where you manufacture your own goods directly. If you want to build inventory this may also work. In this case the supply chain financing is specialized. You will always have the opportunity to buy raw materials from suppliers. This can help you fulfill orders and grow your business. When it comes to supplier financing there is no specific order that can restrict it.
Financing your inventory is another financing option. This is normally applicable to the companies that manufacture goods or even have unsold inventory. In this case the solution will work like a line of credit that is secured by goods. Once revenue is generated from selling inventory, the line is then repaid. Inventory financing mostly helps large companies. Some limitations also apply in this case. Setting this line will take a lot of time and money. This is due to the fact that the initial inventory must be evaluated. The distresses sale value will be the one to determine the inventory’s value. This is normally lower than the market value for some inventory. There is also asset-based lending that helps you finance your company’s assets. In this case the structure will depend on the underlying asset that is being financed.