Types of Commercial & Government Construction Financing Options
Being a government contractor offers you very many benefits. The government gives incentives to small businesses to work with them. Getting financing from the government is very important in this case. There are very many financing options for construction. Factor slow-paying invoices is one these options. A factoring program allows you to finance any slow-paying invoices. You will not have to wait to get paid by the government in this case. This means it will be easy for you to get an advance from a factoring company. When the invoice is paid by the government the whole transaction is concluded. You can assign the proceeds of the invoice when you have government invoices. You will pay them to a third party who will now give the funding.
Another financing option is finance purchase orders. Most small businesses work with vendors who keep demanding payment. This has to happen before the product is shipped. Having huge orders will give you a great problem. This is because you might not have enough money to cover the payment. In this case you should actually consider the government purchase order. All supplier costs are paid this kind of funding. These costs should be associated with a specific purchase order. You will be able to fulfill the order because you will purchase the goods in this case. 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. In this case if you manufacture your own goods, you will benefit greatly from this. If you want to build inventory this may also work. In this case the supply chain financing is specialized. If you wish you may be able to buy raw materials from your 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.
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. Once revenue is generated from selling inventory, the line is then repaid. Most inventory financing helps finance larger companies. There are also some limitations that apply. Setting this line will take a lot of time and money. This is because the initial inventory must be evaluated. The distresses sale value will be the one to determine the inventory’s value. For some inventory this value can be lower than the market value. Another financing option is asset-based lending. The underlying asset that is being financed is the one that determines the structure.