Get Help Securing Government Contracts with a Financial Capability Letter
Become a Stronger Government Supplier in Your Buyer’s Eyes
- Get Help Securing Government Contracts with a Financial Capability Letter
- Become a Stronger Government Supplier in Your Buyer’s Eyes
- Can Start-Ups obtain a Letter of Comfort?
- Prove You Have the Financial Resources to Execute a Contract
- What Is a Letter of Comfort?
- What Is a Letter of Financial Capability?
- Who writes a letter of financial capability or comfort?
- Letter of Comfort for Government Contractors
- Bankers Factoring Government Contractor Financing Comfort Letters
Can Start-Ups obtain a Letter of Comfort?
Large companies and government buyers want to help MBEs, veteran-owned businesses, WBEs, and other undercapitalized suppliers. Bankers Factoring has a letter of financial capability or letter of comfort program to help buyers feel more at ease with the new and growing suppliers they want to do business with. As part of the government buyer’s due diligence, federal agencies may authorize purchase orders based on a financial capability letter for disadvantaged businesses.
We will also tell your government customers how factoring works and gives you unlimited working capital based on the invoices you generate.
Obtaining the letter helps our client’s businesses gain trust and prove creditworthiness in the eyes of buyers they hope to become a solid vendor. The letter includes a declaration of holding and awareness, a disclaimer, and credit service details. Even though it confirms our clients’ factoring facility with us before they enter into a transaction, it does not guarantee payments or repayments.
Prove You Have the Financial Resources to Execute a Contract
You’ve got a great idea, the funding is there, and you’re ready to build your product or service. But what if there’s one more hurdle that you need to clear up before all of this can go forward? You may need a letter of comfort or a letter of financial capability. These two documents are the same: they prove that your business has the financial resources to successfully execute a contract if it wins with a particular buyer.
Factoring government receivables helps contractors stay afloat during contracts. However, many businesses fail to obtain government contract factoring. A letter of financial comfort strengthens your ability to obtain contracts from the federal government.
No hard credit report is needed to demonstrate your financial resources. Free credit reports or soft pulls help Bankers Factoring send certified letters of comfort to government agencies. We help small businesses and contractors secure working capital and demonstrate to their customers their available resources.
Government Factoring is a fast way to sell your unpaid government receivables for an initial 80 to 93% cash advance. Complete an encrypted application to begin obtaining your letter of financial capability.
What Is a Letter of Comfort?
A letter of comfort is a document used by factoring companies, banks, lenders, and other financial institutions to verify that a company has the financial capacity to manage a project or contract. It’s also known as a letter of financial capability or LFC.
An LFC informs your customers about your ability to handle the financial obligations of your contracts. A letter of comfort provides your customer peace of mind about your working capital to fund operations.
Government contract payroll financing is a major expense for contractors, and agencies use the LFC to evaluate your funding.
What Is a Letter of Financial Capability?
A letter of financial capability is a letter that demonstrates your business’s ability to pay its people and bills and execute successfully. It is attached to the contract you are hoping to be awarded. This document strengthens your ability to acquire government contract financing solutions. A government agency likes to see a letter of comfort for its contractors.
A letter of financial capability should include the amount of credit or access to funding your company has and for how long. Federal Acquisition Regulations (FAR) provide small business government contract framework. The government wants you to demonstrate your fiscal position without viewing your financial statements.
Who writes a letter of financial capability or comfort?
A bank or financial institution, like Bankers Factoring, will write a letter of financial capability or comfort. It should come from a senior manager and be written on the lender’s letterhead. The company’s name and contact details should also be included in this section, along with a statement of financial capability.
Letter of Comfort for Government Contractors
A letter of comfort is an assurance from a third party that the contractor can perform the work it has been contracted to do. Bankers Factoring offers a special program for government factoring services and issues financial capability letters for our clients.
Instead of running a credit report, a certified letter from Bankers Factoring can help you secure more government awards. It is important contractors have the resources to perform work being paid for with tax dollars. Government projects had strict regulations to protect taxpayer dollars.
Some main requirements for a letter of comfort include the following:
- Official letterhead of the institution or factoring company
- The type of financing program
- Amount of funding available
- General statement exhibiting support for contractor financial obligations
- A senior ranking official should sign the letter
See our related article: Government Contract Factoring Guide
Bankers Factoring Government Contractor Financing Comfort Letters
Our third-party comfort letter is a statement that certifies your financial capacity via your invoice factoring facility with us. It can also help mitigate your credit score.
Bankers Factoring government contractors’ factoring is a form of asset-based funding that can provide your customers with financial capability letters.
The use of Bankers Factoring government contractors’ financing has grown in popularity since its inception in the 1990s. The reason behind this trend is simple: it provides many benefits to government agencies, large corporate buyers, and minority contractors alike.