Guide · Government contractors · October 2026
Government Contract Financing: How to Fund Mobilization and Bridge 30–90 Day Payments
Winning a contract with a city, a county, the State of Florida or a federal agency is the best news and the worst cash-flow problem a small business can have: you hire, buy and mobilize before you invoice, and the government pays 30, 60 or 90 days after it accepts the work. This guide explains which products finance a government contract, how invoices to the government are used as backing, how much to borrow and what lenders look at in a public contractor’s file.
How Do You Finance a Government Contract?
With two products that work together: working capital or a line of credit for mobilization (hiring, materials, bonds, insurance) before the first invoice, and receivables financing against invoices the agency has accepted, which advances 80% to 90% of each invoice within 24 to 48 hours while the government pays in 30 to 90 days. Invoices to a government are the strongest backing there is for this kind of financing because the payer does not go out of business, so the cost is lower than on commercial invoices. A business with 12 months in operation, a signed contract and $20,000 or more a month in deposits usually has mobilization funded in 2 to 5 days.
The Two Phases and Their Products
| Phase | Need | Product | Amount | Cost | Time |
|---|---|---|---|---|---|
| Mobilization (before invoicing) | First weeks of payroll, materials, equipment, bond, insurance | Working capital or line of credit | $25,000 to $500,000; 10% to 20% of contract value is typical | 12% to 30% APR or a factor rate; prime + 1% to 10% on a line | 1 to 5 days |
| Performance (invoices issued) | Cover the 30 to 90 days until the agency pays | Receivables financing | 80% to 90% of each accepted invoice | 1% to 3% per 30 days (lower than commercial invoices) | 24 to 48 hours per invoice after 2 to 5 days of setup |
| Contract-specific equipment | Vehicles, machinery, technology | Equipment financing | The equipment’s value | 7% to 15% APR | 2 to 5 days |
| Large multi-year contracts | Permanent capital | SBA 7(a) or CAPLines | Up to $5,000,000 | Prime + 2.25% to 3% | 30 to 90 days |
The typical mistake is financing the whole contract with one working-capital advance taken before work starts. The advance costs more than receivables financing and is repaid in fixed payments while the government has not yet paid anything. The right structure funds mobilization with a small working-capital product and the rest against invoices as they are issued.
How Much to Borrow for Mobilization
Add up what you must pay before the agency’s first payment arrives: payroll for the first 4 to 8 weeks (including new hires), first-phase materials, subcontractor deposits, the performance bond (1% to 3% of the contract), any additional insurance the contract requires and equipment you do not own. Subtract the mobilization advance if the contract provides one (some public contracts do). For most contractors in the network, mobilization lands between 10% and 20% of contract value, and the lender sizes it to the business’s historical deposits, not to the new contract’s value.
What a Lender Looks at in a Government Contractor
- The signed contract or notice of award, with the payment schedule
- Twelve months or more in business; most receivables funders want a history of having collected invoices before
- Three to six months of business bank statements
- Registration in SAM.gov (federal) or the state or county vendor portal
- How prior contracts were paid: invoices accepted and paid on time
- Current bonds and insurance
- Invoices not already assigned to another lender (no prior UCC on receivables)
In receivables financing the lender underwrites the payer more than the contractor. An invoice accepted by Miami-Dade County or a federal agency is a first-class asset; that is why the cost is lower and the amounts higher than on invoices to private customers.
What It Costs on a $400,000 Contract
An 8-month contract, $50,000 invoiced monthly, the agency pays at 60 days, $60,000 mobilization. October 2026 ranges, illustrative.
| Structure | Approximate total cost | Comment |
|---|---|---|
| $60,000 mobilization on 12-month working capital at 20% + invoices financed at 2% per 30 days (2 months each) | $6,697 + $16,000 = $22,697 | The recommended structure; the invoice cost is paid as you collect |
| The whole contract on a $200,000 advance, 1.25 factor over 12 months | $50,000 | More expensive, with weekly payments before the first invoice |
| $150,000 line of credit at 14%, drawn 6 months on average | $10,500 | Cheapest if the business already has it open and the owner’s credit is 650+ |
Public Contracts in Florida
The State of Florida and its counties and cities buy through vendor portals (MyFloridaMarketPlace at the state level, plus each county’s and city’s portal). Florida’s Local Government Prompt Payment Act requires local agencies to pay proper invoices within 45 days in most cases, which makes invoices to Florida governments especially good collateral for receivables financing. Contractors certified as minority- or Hispanic-owned businesses have access to preferential contracting programs at the state and county level; the certification does not change the financing, but it does change the volume of contracts. See business funding in Florida.
How to Apply
- Complete the online application in about five minutes. One soft credit pull; it does not affect your score.
- Upload three months of business bank statements and a voided check.
- A funding specialist reviews the file the same business day and presents it to the funders in the network that fit.
- Compare the offers side by side, with the total cost of each, and sign only the one you understand.
RAN Funding is a business financing broker, not a lender. The funder that approves you sets the terms and sends the money, and pays RAN Funding when the deal closes.
Common Questions
Can I finance a contract I have not won yet?
Mobilization is financed against the signed contract or award. Before that, a lender can pre-approve a line on the business’s bank statements, which helps you bid with confidence.
Does the government have to know I am financing my invoices?
With receivables financing, yes: the funder notifies the assignment of the invoice (on federal contracts, under the Assignment of Claims Act). It is a routine procedure and does not affect the relationship with the agency.
Can a subcontractor on a public contract finance its invoices?
Yes, against the general contractor. The cost is somewhat higher because the payer is a private company, not the agency.
What if the agency pays late?
Financed invoices usually carry a term of up to 90 days; if payment runs past that, the cost rises for each additional 30 days. Florida local agencies are subject to the Prompt Payment Act.
How long does it take?
Mobilization: 1 to 5 days. Setting up invoice financing: 2 to 5 days; after that, each invoice is advanced in 24 to 48 hours.
Does applying affect my credit?
No. Seeing offers through RAN Funding is a soft pull. A hard pull happens only when you accept a specific offer, and only from that funder.
Is RAN Funding a lender?
No. RAN Funding is a business financing broker. One application goes to the funders in our network that fit your file; the funder makes the credit decision, sets the terms and funds the deal, and pays RAN Funding when it closes.
Sources
- RAN Funding internal application records, October 2024 to October 2026 — RAN Funding
- Florida Local Government Prompt Payment Act, Part VII, Chapter 218, Florida Statutes — Florida Legislature
- 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey — Federal Reserve Banks, 2026
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist reads your statements the same day and tells you which products fit, what each costs and how fast it funds.