Working Capital for Government Contractors: Fund Your Federal Business

Working capital for government contractors is the lifeblood of any successful contracting business. Whether you are a seasoned federal contractor or expanding into government work, maintaining adequate working capital ensures you can meet payroll, purchase materials, and perform on your contracts without financial strain.

Noble Funding has provided working capital solutions to government contractors for over 20 years. With more than $1 billion funded, an A+ BBB rating, and zero complaints since 2005, we understand the unique financial challenges contractors face and deliver solutions that keep your business moving forward.

Why Working Capital Matters for Government Contractors

The Government Payment Timeline

Government contracts provide reliable revenue, but the payment cycle creates cash flow challenges:

• Federal invoices: Typically paid within 30-45 days under the Prompt Payment Act
• State contracts: May take 45-60 days or longer
• Local government: Payment timelines vary widely
• Complex contracts: Multi-level approvals and retainage (if any) can extend payment to 90+ days

During this waiting period, you still need to pay:

• Employees (weekly or bi-weekly)
• Suppliers and vendors (net 30 or sooner)
• Subcontractors (per contract terms)
• Rent, utilities, and insurance (monthly)
• Equipment and materials (often upfront)

The Growth Challenge

Growing your government contracting business multiplies working capital needs:

New Contract Awards

• Hiring costs before revenue begins
• Equipment and materials for contract startup
• Security clearance processing expenses
• Facility setup and compliance costs

Multiple Simultaneous Contracts

• Managing cash flow across projects
• Covering retainage on each contract
• Handling different payment schedules
• Meeting various compliance requirements

Scaling Capacity

• Larger payroll obligations
• Increased bonding requirements
• Higher insurance premiums
• More complex cash management

Working Capital Ratios and Bonding

Surety companies evaluate your working capital when determining bonding capacity:

• Strong working capital supports larger bond limits
• Insufficient working capital restricts growth
• Consistent working capital demonstrates financial stability
• Cash reserves support performance confidence

Working Capital Solutions for Government Contractors

Bank Lines of Credit

Traditional revolving credit facilities:

Advantages:

• Lower interest rates
• Flexible draw and repay
• Builds banking relationship

Limitations:

• Slow approval process
• Often requires personal guarantee
• May not understand contractor cash flow
• Conservative lending limits

SBA CAPLines

SBA-backed working capital lines for contractors:

Advantages:

• Government-backed
• Reasonable rates
• Multiple program options

Limitations:

• Lengthy application process
• Extensive documentation
• May take weeks or months
• Size limitations

Invoice Financing

Advancing funds against outstanding invoices:

Advantages:

• Fast access to cash
• Grows with receivables
• Less focus on credit

Limitations:

• Ongoing cost per invoice
• May require notification
• Not suitable for all contracts
• Can be expensive long-term

Contract Financing

Loans secured by specific contracts:

Advantages:

• Tied to contract value
• Understands government work
• Contract-focused underwriting

Limitations:

• Contract-specific limits
• May require assignment
• Varies by contract type

Junior Capital from Noble Funding

Subordinated working capital that complements existing financing:

Advantages:

• Fast funding (2-3 days)
• $300,000 to $10 million
• No personal guarantee options
• Works alongside bank financing
• Flexible 12-18 month terms

Considerations:

• Higher rates than bank loans
• Best for established contractors

How Noble Funding Provides Working Capital for Government Contractors

Noble Funding delivers junior capital solutions designed for contractors with government business. Here is what sets us apart:

Speed That Matches Opportunity

Government contracts do not wait. When you need working capital to mobilize, scale, or bridge, Noble Funding can provide $2 to $3 million in 2 or 3 days if necessary.

Capital That Makes a Difference

We offer working capital from $300,000 to $10 million, amounts that support meaningful business needs.

Complements Your Bank

Our junior capital is fully subordinated to any bank or senior secured lender. We work alongside your existing financing, not against it.

Terms That Work

Choose 12, 15, or 18-month terms with six months of early payoff discounts. Structure your working capital around your contract timelines.

Protect Your Assets

Noble Funding can structure working capital in some cases with no UCC filings on corporate assets and no personal guarantees for qualified contractors.

Profitability Flexibility

We work with companies that have positive or negative EBITDA. Government contractors often face timing-related profitability variations, and we understand that reality.

Proven Experience

With over $1 billion funded since 2005 and an A+ BBB rating with zero complaints, Noble Funding has the track record contractors trust.

Working Capital Use Cases for Government Contractors

Contract Startup Mobilization

A systems integration firm won a $6 million Department of Defense contract. They needed $900,000 for hiring, equipment, and facility setup before contract start. Noble Funding provided the working capital in 3 business days.

Payroll Bridge During Payment Delays

A professional services contractor experienced payment delays across multiple contracts when agency processing slowed. They needed $1.2 million to cover three payroll cycles. Noble Funding bridged the gap until payments arrived.

Inventory and Materials Purchase

A supply chain contractor received a large federal order requiring $2 million in inventory purchases. With their bank line committed to other needs, Noble Funding’s working capital enabled them to fulfill the order.

Seasonal Staff Ramp-Up

A landscaping and grounds maintenance contractor with multiple federal facility contracts needed $750,000 to hire seasonal workers before peak season. Working capital from Noble Funding enabled timely staffing.

Bonding Capacity Enhancement

A construction contractor sought larger projects but needed additional working capital to satisfy surety requirements. Noble Funding’s capital strengthened their financial position/cash on hand and enabled larger bonds.

Acquisition Working Capital

A defense contractor acquired a smaller company with valuable contract vehicles. They needed working capital to integrate operations and continue performing on acquired contracts.

Calculating Working Capital Needs

Basic Working Capital Formula

Working Capital = Current Assets – Current Liabilities

For contractors, focus on:

• Cash and cash equivalents
• Accounts receivable (especially government invoices)
• Inventory and work in progress
• Short-term debt obligations
• Accounts payable

Contractor-Specific Factors

Revenue Timing

• Days sales outstanding (DSO) for government customers
• Payment milestone schedules
• Retainage release timing

Cost Timing

• Payroll cycles and frequency
• Supplier payment terms
• Subcontractor payment requirements

Growth Impact

• New contract startup costs
• Staff scaling requirements
• Equipment and facility needs

Working Capital Ratio Guidelines

Current Ratio (Current Assets / Current Liabilities)

• Below 1.0: Working capital deficit
• 1.0 to 1.5: Adequate for stable operations
• 1.5 to 2.0: Good working capital position
• Above 2.0: Strong position for growth

Surety companies often look for current ratios above 1.5 for significant bonding.

Best Practices for Managing Working Capital

1. Invoice Promptly and Accurately

• Submit invoices immediately when eligible
• Follow contract invoicing requirements exactly
• Track invoice status proactively
• Resolve questions quickly to avoid delays

2. Accelerate Receivables Where Possible

• Request progress payments when available
• Use electronic invoicing for faster processing
• Build relationships with contracting officers
• Monitor WAWF or other payment systems closely

3. Manage Payables Strategically

• Take early payment discounts when beneficial
• Negotiate extended terms with suppliers
• Time payments to match cash inflows
• Maintain supplier relationships

4. Forecast Cash Flow Continuously

• Project cash needs 13 weeks out minimum
• Model multiple scenarios (best, expected, worst)
• Identify potential gaps early
• Plan financing before needs become urgent

5. Maintain Financing Relationships

• Build relationships with multiple financing sources
• Keep lenders informed of your business
• Apply for financing before urgent needs arise
• Understand your options before you need them

Frequently Asked Questions

How much working capital do government contractors need?

It depends on your business, but many contractors maintain working capital equal to 2-3 months of operating expenses plus any contract startup needs.

Can I get working capital if I am not profitable?

Yes. Noble Funding works with companies that have positive or negative EBITDA. We understand that government contracting involves timing factors that affect profitability.

How fast can I access working capital?

Noble Funding can provide $2 to $3 million in 2-3 business days for qualified contractors. We can do less or more depending upon specific need.

Do I need to pledge my contracts as collateral?

Not necessarily. Noble Funding can structure working capital without UCC filings on corporate assets.

Is a personal guarantee required?

Not always. Qualified contractors can access Noble Funding’s working capital without true personal guarantees.

What revenue size do you work with?

Noble Funding provides working capital to contractors with $5 million to $150 million in annual revenue.

Get Working Capital for Your Contracting Business

Working capital should not limit your government contracting success. Noble Funding provides the financial foundation contractors need to win, perform, and grow.

Why contractors choose Noble Funding:

• 20 years of government contractor experience
• Over $1 billion funded to businesses nationwide
• A+ BBB rating with zero complaints
• Working capital in days, not weeks
• $300,000 to $10 million available
• Subordinated to your existing bank financing
• No personal guarantee options

Contact Noble Funding today to discuss working capital solutions for your government contracting business. The capital you need to perform and grow is within reach.