SpendQueryBeta

FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.3

FAR 32.306 Loan guarantees for subcontracts.

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 addresses what an agency should do when a subcontractor is financially weak compared to its contractor and a loan guarantee is requested. The agency should try to have the contractor make progress payments to the subcontractor instead, which may reduce or eliminate the need for the loan guarantee and shift part or all of the risk of loss to the contractor.

Applies to: Agencies handling requests for loan guarantees involving financially weak subcontractors

What it requires

  • Try to arrange for the contractor to provide progress payments to the subcontractor

Key terms: loan guarantee · subcontractor · contractor · progress payments · risk of loss

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

The text

If the request for a loan guarantee concerns a subcontractor that is financially weak in comparison with its contractor, the Government's interests may be fostered by the contractor making progress payments to the subcontractor. If so, the agency shall try to arrange for the contractor to provide the progress payments. As a result, the need for the loan guarantee may be reduced or eliminated and the contractor would bear part or all of the risk of loss arising from the selection of the subcontractor.

← 32.305 Loan guarantees for terminated contracts. · 32.400 Scope of subpart. →

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 32.306 Loan guarantees for subcontracts · SpendQuery