Odd Trend in Government Contractors

Lately, we have been getting a lot of calls from prospects that are looking to finance their government contracts using purchase order financing. Many of these are start ups. As I have said before, a big chunk of our business involves financing start ups. So far so good.

What is odd is that many of these company owners seem to have unrealistic funding expectations. For example, many of these owners:

1. Can't put any money into the business (above say, $500)

2. Have never sold anything to the government before

3. Don't have much business experience

I am all for entrepreneurship and like to think that we are a good business financing source for young companies. At the same time, most funding companies like to work with business owners that have realistic expectations.

Let me ask a reader question - would you be willing to fund a company that has no experience and no capital? Would you?

So - what can a very small business owner who is low in cash but wants to work in this field do? Well, if you'd like to increase your chances of getting funding, consider the following:

1. Learn how to sell to the government. Read read and read some more!

2. Get a couple of successful transactions under your belt - even if they are small. This is critical.

3. Save some money and invest it in your business. Show the funding company that you believe in your own business by putting your own money. Have no money to invest? Well, start cutting some of your discretionary expenses and start saving. No one said business ownership was easy :-)

4. Be realistic. If you have done two $5000 transactions with your new business, don't call your funding company and tell them you will be doing $1000,000 in 6 months. Sorry, it's not believable.

And remember,plan, plan and plan some more. Weather you are looking for po funding or a business loan (or something in between), funding companies prefer to work with business owners that plan ahead.

One last thing - don't get discouraged if you can't get po funding the first time. It can happen. You may also want to consider getting factoring as a stop gap. Qualifying for factoring is usually easier than qualifying for po funding.

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Looking for information on purchase order financing? Read the purchase order finance blog