More Than 50% of US Small Businesses Unaware of Government Contract Opportunities

Setscale, a purchase order financing company, reported that more than half (52%) of all surveyed small business owners are not aware of the specific contracts the U.S. federal government awards to small businesses each year, potentially resulting in the loss of approximately $84 billion* per year.

Government contracts are well-valued and often serve as a gateway to a steady source of income and small business growth. According to Setscale’s survey, 71% of U.S. small businesses said that they're aware of lucrative and reliable government contracts, but more than half (52%) said they don't know what specific contracts are available to them. Meanwhile, more than a quarter (29%) of U.S. small businesses are completely unaware that the federal government awards contracts to small businesses.

This report highlights that despite the federal government investing in small businesses, business owners are still struggling to fill open government purchase orders. Almost 70% of U.S. small businesses struggle with cash flow and working capital, preventing them from meeting the demand of a government contract. Many businesses pursue lines of credit from a bank or financial institution to fulfill purchase orders, but these are costly and hard to obtain. Alternative finance like purchase order financing can help these businesses secure and fulfill valuable government contracts, according to Setscale.

Moreover, U.S. small business owners said that a lack of cash flow and working capital prevents them from securing government contracts. At 22%, a lack of cash flow or capital was the second most popular factor preventing U.S. small business owners from securing a government contract. The most popular reason given was a lack of time and resources.

"Our small business financing report sheds light on an issue that more than half of surveyed business owners know all too well — that even though the U.S. federal government is awarding a record number of contracts to our small businesses, they're still struggling financially to fulfill open purchase orders, potentially losing out on more than $80 billion each fiscal year," Daniel Fine, founder and CEO of Setscale, said. "Government contracts are fierce competition for U.S. small business owners for a reason. They're reliable, well-valued, and often lead to steady sources of income. However, due to a lack of knowledge of the specific government contract awarding process, business owners are unsure if they can fulfill the government's open purchase orders without pursuing a line of credit from a bank or financial institution.

“With interest rates at an all-time high, it's an incredibly bad time to be a borrower. PO financing allows a small business to quickly bid on a contract, finance the full transaction and scale operations to meet the size of the order."

To read more about Setscale's small business survey and for resources about government contracts for small businesses, click here.

*In fiscal year 2022, the U.S. federal government awarded $162.9 billion in federal contracting opportunities to small businesses.