Government contractor financing covers the gap between winning a contract and getting paid for it. Contractors use business loans to fund mobilization costs, cover payroll through agency payment cycles, purchase equipment a contract requires, and take on larger awards than their cash reserves alone could support. Options include lines of credit for recurring gaps, short-term loans for startup costs on a new award, and equipment financing for contract-specific gear. Most alternative lenders require six months in business, consistent monthly revenue, and a credit score of 500 or higher, with approvals in 24 to 48 hours.
Why Government Contracting Strains Cash Flow
Winning the award is the easy part of the cash flow story. The hard part starts the next morning. A contractor has to hire, insure, equip, and begin performing before the first invoice goes out, and then wait for the agency’s payment cycle after the invoice is accepted. Federal agencies generally pay on a schedule measured in weeks after a proper invoice, and state and local payers can take longer. Stack those stages together and the first dollars from a new contract can arrive 60 to 90 days after the work begins.
Consider a commercial cleaning company that wins a one-year facilities contract requiring three new hires, supplies, and a higher insurance limit. Every one of those costs lands in the first month. The revenue that covers them lands in month three. That mismatch, repeated across every new award, is why contractors with full pipelines can still run short on cash.
Need Funds Quickly?
What Is Mobilization Funding?
Mobilization funding is capital used to begin performing on a newly awarded contract before the first payment arrives. It covers the upfront costs of starting the work: hiring and payroll, materials and supplies, insurance and bonding requirements, equipment, and site or office setup. Contractors typically repay it from the contract’s early payments once invoicing begins.
Mobilization needs are usually one-time and tied to a specific award, which is why they map naturally to a defined loan rather than open-ended borrowing.
Funding Options That Fit Contract Work
A business line of credit is the workhorse for contractors with recurring gaps. Payroll goes out every two weeks while agencies pay on their own cycle, so the owner draws against the line to cover payroll and repays it when the invoice clears. Interest applies only to what is drawn, and the line refreshes as it is repaid.
A short-term loan fits mobilization. The award defines the amount you need and the payment schedule defines when you can repay, which makes a fixed-term loan with a clear payoff date the natural structure. Funding often arrives within days of approval, which matters when a performance start date is already on the calendar.
Equipment financing works for contract-required gear, from vehicles to specialized machinery, with the equipment itself serving as collateral. And for contractors sitting on invoiced but unpaid receivables, invoice-based funding is another route; our guide to invoice factoring for small business explains how that model works.
SBA programs belong in the conversation for contractors who can wait through a longer process. The government actively wants small firms in this market. The SBA works with federal agencies to award 23 percent of prime contract dollars to small businesses, according to its federal contracting guide, and SBA-backed loans can fund contract growth for borrowers with strong credit and 30 to 90 days of lead time. When the start date is next month, alternative funding is usually the practical path.
How Government Contractors Qualify
Alternative lenders underwrite contractors on revenue rather than collateral. The standard bar is six months in business, $15,000 or more in monthly revenue, and a credit score of 500 or higher, verified through recent bank statements. A signed award letter strengthens the picture because it documents revenue that is already committed, but the approval itself rests on the revenue your business is producing today. That is good news for subcontractors too, since their qualification does not depend on the agency relationship at all, only on their own deposits.
One habit separates contractors who scale from those who stall: they arrange funding before the award forces the issue. A line of credit opened during a quiet month costs nothing to hold and turns a surprise win into a scheduling exercise instead of a scramble.
Delta Capital Group Funds Government Contractors Nationwide
Delta Capital Group provides unsecured working capital from $5,000 to $5,000,000 to government contractors across the country. No collateral required. Approvals happen in as little as 24 hours, and 95 percent of approved applicants are funded within 48 hours. Minimum qualifications are 6 months in business, $15,000 in monthly revenue, and a 500 credit score. Apply at deltacapitalgroup.com.
Frequently Asked Questions
Can a government contractor get a business loan with bad credit?
Yes. Alternative lenders approve contractors with credit scores as low as 500 when monthly revenue supports the payment. Underwriting focuses on bank deposits and business performance rather than personal credit history.
How much can a government contractor borrow?
Loan amounts typically range from $5,000 to $5,000,000 depending on monthly revenue and time in business. A contractor generating $50,000 per month in revenue can generally qualify for a meaningful multiple of that in working capital.
What is the best loan type for mobilization costs?
A short-term loan usually fits best because mobilization is a defined, one-time expense tied to a specific award, and the contract’s payment schedule gives you a clear repayment path. Contractors with ongoing awards often pair it with a line of credit for recurring payroll gaps.
How fast can funding arrive after a contract award?
With complete documentation, alternative lenders commonly approve within 24 hours and fund within 48. That timeline lets a contractor commit to a performance start date without waiting weeks for a bank decision.
Do government contractors qualify for SBA loans?
Yes. SBA programs actively support small business contractors, and the loans work well for major expansions when you have strong credit and can wait 30 to 90 days for funding. For near-term contract starts, faster alternative funding is usually the better fit.
