Types of Commercial & Government Construction Financing Options
Being a government contractor offers you very many benefits. Small businesses normally get incentives from the government. Getting financing from the government is very important in this case. There are various types of financing options in this case. One of these finance option includes 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 a factoring company. Once the government pays the invoice, the transaction will be concluded. With government invoices you can be allowed to assign the proceeds of the invoice. You will then get the funding from a third party whom you will give the invoice.
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. If you dont have enough money to cover the payment, this will be very useful. The government purchase order will be very useful. 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. In this case the transaction concludes and settles once the government gets the products and pays for it.
Another finance option if financing your supplier payments. This is in a case where you manufacture goods directly. If you want to build inventory this may also work. This is normally a specialized type of supply chain financing. In this case it will be possible for you to buy raw materials from your suppliers. You will be able to grow your business in this case because you will be in a position to fulfill orders. There is no specific order that ties supplier financing.
Another financing option is financing your inventory. This is normally applicable to the companies that manufacture goods or even have unsold inventory. This solution normally works like a line of credit that is secured by inventory. The line is normally repaid after inventory sells and generates revenue. Inventory financing mostly helps large companies. In this case it also has some limitations. It can be very expensive and time consuming to actually set this line up. This is because the initial inventory must be evaluated. In this case inventory is often valued at a percentage of its distressed sale value. For some inventory this value can be lower than the market value. You can finance your company’s assets using asset-based lending. In this case the structure is going to be determined by the asset that is being financed.