Glossary · Reading the business
Government contracts
In short
These are agreements where the business provides goods or services to federal, state, or local government entities. They can be stable revenue, but come with strict rules and potential risks.
What it means in a deal
If the target business relies heavily on government contracts, you need to understand the terms, renewal likelihood, and any specific compliance requirements. These contracts often have unique payment processes and transferability issues that impact your cash flow post-acquisition.
Related terms
Common questions about Government contracts
- What if the business I'm acquiring relies heavily on government contracts for revenue?
- What if the collateral for a 7(a) loan includes accounts receivable from government contracts?
- What happens if a significant portion of the acquired business's revenue is generated from government contracts?
- How does the SBA 7(a) loan program value and take collateral on accounts receivable from government contracts?
- Can an SBA 7(a) loan be used to purchase a business where significant revenue comes from government contracts?
- What specific conditions allow a lender to approve a 7(a) loan for a business relying heavily on government contracts?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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