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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.1

FAR 32.105 Uses of contract financing.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section says that contract financing methods are meant to be repaid through contract performance, so agencies should generally use them only to finance a contractor's working capital, not to expand contractor-owned facilities or buy fixed assets. It also lists limited exceptions for loan guarantees and notes that the limits do not apply when facilities are being acquired for Government ownership.

Applies to: Agencies using contract financing methods and contractors receiving that financing

What it requires

  • Use contract financing methods only for financing contractor working capital
  • Do not use contract financing methods for expansion of contractor-owned facilities or acquisition of fixed assets

Key terms: contract financing · self-liquidating · working capital · fixed assets · loan guarantees

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) Contract financing methods covered in this part are intended to be self-liquidating through contract performance. Consequently, agencies shall only use the methods for financing of contractor working capital, not for the expansion of contractor-owned facilities or the acquisition of fixed assets. However, under loan guarantees, exceptions may be made for—

(1) Facilities expansion of a minor or incidental nature, if a relatively small part of the guaranteed loan is used for the expansion and the contractor's repayment would not be delayed or impaired; or

(2) Other instances of facilities expansion for which contract financing is appropriate under agency procedures.

(b) The limitations in this section do not apply to contracts under which facilities are being acquired for Government ownership.

← 32.104 Providing contract financing. · 32.106 Order of preference. →

Rule changes for FAR Part 32

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 32.105 Uses of contract financing · SpendQuery