Winning a government contract is just the beginning of becoming a government contractor. Remember that government contracts are huge projects requiring a significant amount of capital, which some businesses might not be able to fund out of pocket. For that reason, they often turn to the best government contractor lenders for the needed cash injection.
Government contract funding is a big commitment, and you’ll want to work with a lender that is reputable and offers exceptional service throughout the loan’s duration. If you’re in the process of finding the best government contract lender, here are 5 five pointers to keep in mind:
1. Do Your Homework
The Better Business Bureau (BBB) is a non-profit organization that evaluates businesses and their operations. Their goal is to ‘promote marketplace trust’ by making information about companies available to consumers. They then offer ratings to these businesses. The rating usually ranges from A to F.
As you do your research, aim for lenders with a BBB rating of ‘A’. An ‘A’ rating means that they’re recognized by the BBB, and you’re dealing with a reputable company.
Aside from the BBB rating, it would be wise to do your due diligence. Check for reviews and client feedback online to see how well the company operates and treats customers. You can do this with a quick Google search. This will help you get to know the financing company better, including the most common issues customers face with their services (if there are any).
2. Check Their Rates and Fees
Keep in mind that when you apply for a loan, you won’t just be paying the principal back. You’ll also have to consider the rates and fees, which can add up to the total repayment amount.
As much as possible, lean towards lenders that offer the best rates and fees, based on your current credit and financial standing. In general, the government has perfect credit. That said, government contractor lenders should be able to offer lower rates and fees to the borrower.
Some lenders may also charge a hefty termination fee to avoid losing profits. As much as possible, choose the one that sets minimal or no termination fees on their government contract loan programs.
3. Lean Towards Lenders that are Profitable
When looking at different lenders, it’s also wise to check if the financing company is profitable or not. There’s nothing worse than working with a company that can’t produce the capital if and when you need it.
You can ask them about their annual figures and the average loan amounts they usually grant small businesses. Again, it might be helpful to check their BBB rating and reviews to see if they have a good financial track record and customer service.
4. Highly Experienced in the Industry
Government contract financing can be complicated compared to other types of funding options. That said, you’ll want to make sure that the lender you’re working with is highly knowledgeable about government contracts.
Additionally, lenders specializing in government contract financing tend to offer lower rates than lenders that don’t usually deal with this type of financing.
5. Compare lenders
While looking for the best lender, don’t just focus on one financing company. Instead, look around and collect offers. Try to see which one is the most flexible when it comes to qualifications and the loan terms. Be sure that you can afford the repayments for the loan.
Again, you’ll want to work with lenders that understand your current situation and can help you address your business needs without leaving your bank account dry.
Like other business decisions, applying for government contract financing is a big deal. With that, you’ll want to make sure that you’re working with a financing company that is knowledgeable about the ins and outs of the financing.
With hundreds of lenders out there, finding the right one for your business can be overwhelming. But the pointers mentioned above can be a great starting point. Be sure to do a background check and compare different offers. That way, you’ll be able to make an informed decision and decide on the best choice for your company.