Guides

Funding a Contract You Just Won

The award letter is in hand, mobilization costs are due, and the first invoice won't pay for 60+ days. How to size and bridge the gap — and when not to borrow.

The award letter is the best piece of paper your business has received all year, and it is about to cause the tightest ninety days your bank account has seen. That is not a contradiction. It is the standard shape of a won contract, and the owners who come through it comfortably are simply the ones who saw the shape coming.

We fund this moment more than almost any other. A contractor calls us not because business is bad, but because business just got dramatically better on paper — and the money to perform the work has to exist before the first invoice does. Here is how the gap actually works, how to size funding to it, and the situations where funding it is the wrong move.

A won contract is a schedule of expenses that starts now — and payments that start later

The economics of the award are simple and unforgiving. Your costs begin at signing: certificates of insurance, bond premiums where the job requires one, deposits to lock materials pricing, equipment mobilization, and payroll from the first day your crew is on site. Your income begins much later: you typically cannot invoice until work is in place, the invoice then rides your customer's net-30 or net-60 terms, and on many commercial and public jobs a slice of every payment is held back as retainage until the end.

Put hypothetical numbers on it. Say the contract is $310,000. A materials supplier wants $40,000 down to hold pricing, the first four weeks of crew payroll run $30,000, and insurance, bonding, and mobilizing equipment to the site add another $25,000. That is roughly $95,000 out the door before you have submitted the first payment application — on a job that is genuinely profitable end to end.

The job is profitable. The first quarter of it is not liquid. Those are two different problems, and only one of them is solved by winning more work.

Fund the mobilization gap, not the contract value

The instinct after a big award is to borrow a big number — the contract is $310,000, so surely the funding conversation starts somewhere near it. It should not. The number that needs financing is the gap: everything you must spend before the first payment lands, plus a margin for the payment arriving late, because first payments on new contracts have a habit of arriving late. In the hypothetical above, that is $95,000 plus a cushion — not $310,000.

Some lenders will run a quick formula on your recent deposits and hand you the largest number it produces. Decline it — the biggest number a formula produces is rarely the right one. Capital sized to a specific, signed piece of work — with a known payer and a known payment schedule — is borrowing at its cleanest: the money is tied to revenue that already has a signature on it. Capital sized to a lender's maximum is how owners get over-extended on the best day of their year.

An award letter reads well in underwriting — if you present it

Working capital is underwritten off your existing revenue: average monthly deposits, their consistency, time in business. A new contract does not replace that math, but it does something almost as valuable — it explains your file. Project-based businesses have lumpy deposits by nature, because draw and milestone payments land in clusters rather than smooth monthly rhythm. An underwriter who knows the trades reads that lumpiness as the shape of the work; paired with a signed contract from a creditworthy payer, it reads as a business in motion rather than a business in trouble.

The same logic covers the harder case: a temporarily thin stretch while you wait on a large contract payment. At most lenders a soft revenue month is an automatic no. Our practice is to ask why. A slow stretch with a signed award letter behind it is a conversation, not a decline — which is precisely why it is worth bringing the contract to the conversation instead of hoping the bank statements speak for themselves.

Speed matters here for a structural reason, not a marketing one. Mobilization deadlines are dated — a notice to proceed, a materials price that expires, a crew that starts Monday. Because a direct lender underwrites its own capital in-house, a decision commonly comes back the same day statements are received, and the move from signed documents to funds is measured in days, not weeks. For a dated obligation, that difference is the whole point.

When funding this contract is the wrong move

Sometimes the honest answer is that this gap should not be bridged with borrowed money — or should not exist at all. Check these before you apply anywhere, including with us.

• The margin cannot absorb the cost of capital. Run the job's numbers with the real cost of funding included. If the contract only pencils when everything goes perfectly, the fix is renegotiating the price or passing on the work — not borrowing harder into a thin job.
• You have not asked the customer yet. A mobilization payment, a materials deposit, or a mobilization line item in the schedule of values is standard in many trades, and the cheapest bridge is the one your customer funds. Ask before you borrow.
• You are already carrying multiple advances or loans. Adding a new position to start a new job is how a cash-flow gap becomes a cash-flow spiral. Pay one or two down first — a funder who tells you that is protecting your business, not withholding from it.
• The start date is months out and a bank would have you. If you qualify for bank or SBA money and the timeline genuinely allows the wait, cheaper capital is the better answer, and we will say so.

Line up the capital when you sign — not when payroll is due

How urgently someone needs money has never predicted whether they can be funded, and we refuse to treat urgency as a qualification. The practical version of that principle: the best moment to arrange contract funding is the window between award and notice to proceed, when you can compare calmly, size precisely, and sign nothing under pressure. The owners who do this treat capital like they treat a sub or a supplier — lined up before the job starts, not scrambled for in week three.

1. 1

   Price the gap before you countersign

   Add up every cost due before the first payment realistically lands — deposits, insurance, bonding, payroll to day 60 or 90 — and add a cushion for a late first payment. That number is your ask. The contract value is not.

2. 2

   Bring the contract to the conversation

   Three to six months of business bank statements plus the award letter is the whole package. The payer's name and payment terms become part of your file's story, and a dedicated advisor can build the payback plan with you around the contract's actual payment schedule.

3. 3

   Put the first big payment to work

   When the first payment application clears, revisit the balance with your advisor. If early payoff carries a discount, a lump payment is your chance to use it — and finishing one funded job cleanly tends to make the next conversation easier.

One more thing worth knowing before you talk to anyone: most of our clients come back. That is not a boast about us so much as evidence about the model — funding sized to a real job, repaid on the job's own schedule, tends to end with a finished project and an owner who bids the next one bigger. Express Capital has funded businesses this way for more than a decade, with our own capital and one dedicated advisor per file.

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