The gap, in real numbers
A services firm — an agency, a consultancy, a software shop, a staffing company — signs a contract that needs three people it does not yet have. They are hired in week one, paid from week two, and the first invoice goes out at the end of month one on net-30 or net-45 terms. By the time it is paid, the firm has funded two to three months of three salaries plus payroll tax, benefits and the equipment they sit at. For three people at $6,000 a month loaded, that is around $40,000 to $55,000 before the contract returns a dollar.
It is not a problem with the business. It is the shape of every services contract, and firms that grow fast hit it harder than firms that do not.
Why it is an easy file
A funder reads three things: your existing deposits, the signed contract with its payment schedule, and the offer letters. The first tells them what the business does today; the second tells them what repays the loan and when; the third tells them the money has a purpose with a date on it. A dated gap with a named repayment source is the easiest kind of working capital to underwrite, and firms with clean statements are offered it readily.
Decision in about a day, funding in one to three business days, amounts around half to one and a half times a month's deposits. Borrow the ramp — the loaded cost of the hires for the months until the first payment clears — and no more. Ask for weekly payments, and ask what early repayment saves, because the first invoice will clear the balance early.
Shrinking the gap before you fund it
A mobilization or onboarding fee in the contract, invoiced on signature, is normal in professional services and covers a real cost. Net-15 on the first invoice, even if the rest are net-30. Billing twice a month for the first quarter. Every one of those moves money forward and reduces what you borrow, and every one of them is easier to ask for before the contract is signed than after.
If this is every contract
A firm that wins a contract a quarter and hires ahead each time is running a permanent gap, sixty days wide, that grows with the business. A business line of credit sized to two months of payroll, drawn on hire and repaid on the first invoice, is the shape of a firm that stops applying for money every time it wins. Apply for it after this contract has paid and the statements show the new run rate.