What Contracting Can't Do for You

April 13, 2006

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On the other hand, if your company has fallen on hard times and is in financial trouble, a government contract will not be able to save you. In fact, a contract might push you over the edge and put you completely out of business if you cannot fulfill its requirements.

You also need to keep in mind that the government does not finance contracts upfront. You must be able to handle the financing of the contract until you are paid, just like you do with your commercial customers. If you need financial assistance, perhaps you can meet with your banker to arrange a loan.

The government may sometimes allow for incremental payments based on incremental shipments or milestones of performance, but only if the value and duration of the contract are large enough. To receive any type of advance payment or progress payment, there must be a compelling reason, and not just the fact that a contractor needs money to stay in business.

Work Smart

Contrary to some late night talk show advice, the government does not have loads of free money to give to you that will set you up in any old business you want. It does have some programs that will help you find low interest loans; check out Government Financing Programs for more on these opportunities.