Private credit lenders have found a new batch of clients: US government contractors short-changed by Elon Musk’s cost-cutting drive and trying to stay afloat.
Legalist, a private capital lender based in San Francisco, told the Financial Times that its “government receivables” business had extended more than $100mn in financing to dozens of contractors since the start of 2025, more than doubling the strategy’s previous total book of business. The group is looking to raise $250mn from investors to extend more similar loans.
Contracts worth more than $70bn have been abandoned by the so-called Department of Government Efficiency (Doge)….
Loans from Legalist serve as bridge financing for government reimbursement on work that has been completed but not yet paid, often when traditional banks have balked at extending credit.
Eva Shang, who co-founded Legalist as a litigation finance investor in 2016 as a participant in the Y Combinator start-up development programme, said the company’s government contractor business had historically been “small time” and “slow going” but had quickly accelerated as the Trump White House sought to shrink the size of the federal government.
“It’s kind of common wisdom in the government contractor community that if you get a termination for convenience you can sometimes be paid more than you would have under the contract,” Shang said.
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