Tender Bridging Finance: How to Fund Delivery After You Win

The cruellest moment in tendering: you win a R2M contract and realise you need R400K for stock, staff and transport before government pays its first invoice in 30 days. This is exactly what bridging finance exists for, and SMMEs that know the options win contracts their balance sheets say they should not.

How purchase order funding works

A funder lends against your signed award letter or purchase order, not your credit history. They typically advance 60 to 80 percent of the order value, pay your suppliers directly in many cases, and collect when government pays you. Repayment terms align to the 30-day government payment cycle.

Where to get it

• SEFA bridging loans: R50K to R5M against a secured contract, the cheapest route, 4 to 6 week approval
• Gauteng Enterprise Propeller contract finance for Gauteng businesses
• NEF for larger black-owned contract finance needs
• Private PO funders: faster (days, not weeks) but materially more expensive; check the total cost against your margin

What every funder will ask for

• The signed award letter or purchase order
• Your costing: prove the contract is profitable after finance costs
• CSD report and tax clearance
• Supplier quotes for what you need to buy
• Company bank statements, usually 6 months

The mistake that kills applications

Pricing the tender without finance costs. If a funder charges 3 to 5 percent per month and government pays in 45 days, that is up to 8 percent off your margin. Build it into your bid price before you submit, not after you win.