Contract Financing

Alternatives to factoring, purchase order financing, and accounts receivable loans.

Companies with purchase orders or receivables from credit-worthy customers will potentially qualify for contract financing. In addition to corporate contracts, most government contracts, agreements, and receivables may also be eligible. Our focus is on companies with financing needs of $1 million to $20 million (as low as $500,000 and as high as $100 million for attractive opportunities).

To qualify for contract financing, borrowers should provide:

• Evidence of the customer's financial capability (unless the customer is publicly traded with easily obtainable current financial information)
• Insurance for products in transit until title passes to customer
• Proof of performance capabilities for purchase order/contract financing requests

Such proof of performance may include a successful track record of completing similar transactions, and priority is given to non-exotic type products and services where manufacturing and shipping risks are minimal. International sales of products and services, as well as international receivables, will generally but not always require an acceptable letter of credit. 

The interest rate and terms will be dependent on the quality of the contract(s) i.e. the age of the accounts, who the customers are, etc. For example, financing of U.S. government contracts can frequently get 85%, and in some cases as much as 90%, of the face amount of the contract(s). As a general rule, receivables can get a slightly higher percentage than purchase orders because performance has already been completed. 

Accounts receivable can also be sold -- a process known as factoring -- if the receivables are (i) not old, (ii) not in dispute, and (iii) from credit worthy customers.