Your SBA loan payment is due every month. Government contracts pay Net-30/60/90 from invoice — not from award. This sandbox shows exactly when your balance goes negative, how deep the deficit gets, and which bridge instrument closes the gap at lowest cost.
Payroll, rent, insurance, materials — anything besides the SBA payment
Recommended bridge
SBA Working Capital Pilot (WCP)
This gap size is the WCP's design target. Prime + 3% APR is cheaper than factoring for sustained deficits. Approach your lender before your first bid.
See how to set this up →| Month | Revenue received | Expenses | Net cash | Running balance |
|---|---|---|---|---|
| Mo 1 | — | $18,747 | -$18,747 | -$18,747 |
| Mo 2 | — | $18,747 | -$18,747 | -$37,494 |
| Mo 3 | $20,000 | $18,747 | $1,253 | -$36,241 |
See months 4–12 — including your peak deficit month Free. No spam. Get the full 12-month model plus the SBA lender conversation guide. | ||||
Model assumes contract work begins Month 1, revenue billed monthly, payments received after the selected payment terms delay. Expenses = SBA payment + monthly overhead every month for 12 months.
Government contracts pay on Net-30/60/90 terms — measured from invoice submission, not contract award. A 6-month contract with Net-60 terms means your first payment arrives in Month 3 and your last payment in Month 8. During the first 2–3 months you are funding payroll, materials, and SBA loan payments out of your own pocket. This gap is predictable, not a crisis — but only if you model it before bidding.
The calculator uses a standard SBA 7(a) amortization: 10.5% APR over a 10-year term. The monthly payment formula is P × r / (1 - (1+r)^-n), where P is the loan amount, r is the monthly rate (10.5% / 12), and n is 120 payments. You can override this with your actual payment amount if your loan has different terms.
The SBA Working Capital Pilot (WCP) is a revolving credit facility sized up to $5 million, secured by government contract receivables and associated accounts receivable. It is designed specifically for the cash flow gap this calculator models — mobilization costs, payroll float, and materials before the first government payment arrives. The WCP is cheaper than invoice factoring (prime + 3% vs. 18–40% APR equivalent) but requires a pre-existing relationship with an SBA-preferred lender. Approach your lender before your first bid, not after you win.
Not directly. SBA 7(a) acquisition loans have use-of-proceeds restrictions tied to the acquisition. Mobilization costs — labor, materials, equipment to begin contract performance — are working capital uses, not acquisition uses. The appropriate instruments are the SBA Working Capital Pilot, a contract-based line of credit from a commercial lender, or invoice factoring once invoices exist. Using your acquisition loan for working capital without lender approval can trigger a covenant review.
A negative running balance means your business is spending more than it is receiving — typically because government payment has not arrived yet. If your SBA loan payment is due and your balance is negative, you are in technical default risk territory. The solution is to model this before bidding and have a bridge instrument pre-arranged: a WCP draw, an invoice factoring agreement, or a negotiated payment deferral with your lender. None of these require you to be in distress to activate — they require you to plan ahead.
The sandbox assumes contract work begins in Month 1. In practice, many contracts have a 30–60 day mobilization period before billable work starts, which would extend the deficit period by 1–2 months. For a conservative model, add one to your payment terms selection (e.g., use Net-90 if your actual terms are Net-60 and you expect a 30-day mobilization phase).