Reimbursement Grant: Allowable Costs, Payment Requests, and Closeout

A reimbursement grant pays you back for costs you have already incurred and paid: you front the money, submit a documented payment request, and the federal awarding agency has 30 calendar days to process a proper request.¹ The catch is working capital. Between the day you cut a check to a vendor and the day the reimbursement hits your bank account, your organization is carrying the project.

Why You Are on Reimbursement Instead of Advance Payment

Most federal grants default to advance payment. Funds flow to you before you spend them, on the condition that your organization can show adequate financial management systems and written procedures to minimize the time between receiving cash and disbursing it.¹

Reimbursement kicks in when one of four things is true: your organization doesn’t meet those advance-payment standards, the agency has attached a specific condition to your award, you asked to be paid this way, or the project is construction.¹

There is a middle ground worth asking about. If you can’t qualify for advance payments but also lack the cash to front costs, the agency can set up a working capital advance. It sends enough cash to cover your estimated disbursements for an initial cycle, then reimburses actual spending going forward.¹ Smaller nonprofits that would otherwise sit on a payment gap for weeks are the intended users.

What You Can Actually Charge to the Grant

The grant agreement controls every dollar. It fixes the period of performance, the eligible cost categories, and a maximum for each budget line. Anything spent outside those dates or outside an approved line is ineligible for reimbursement.

Within the budget, each cost still has to pass the Uniform Guidance allowability test. A cost is allowable only if it is necessary and reasonable for the project, allocable to the award based on the benefit it provides, treated consistently with how you treat similar costs elsewhere, in line with any limitations in your award terms, calculated under generally accepted accounting principles, and documented well enough to prove all of the above.² Miss one of those criteria and the cost is disallowed; your organization absorbs it.

Costs That Need Prior Written Approval

Even inside the approved budget, some changes require the agency’s written sign-off before you spend. The one that catches organizations most often is a budget shift: if cumulative transfers between cost categories exceed 10 percent of the total approved budget (including cost share) and the federal share of your award is over the simplified acquisition threshold, you need prior approval.³

Other actions always need prior approval regardless of dollar amount:

Any change in the project’s scope or objectives.
Replacing or significantly reducing the effort of a principal investigator or project director named in the award.
Moving participant support funds into any other category.
Adding subaward activities not in the original application.
Extending the period of performance. No-cost extension requests should reach the agency at least 10 calendar days before the current end date.

Spending on any of these without written approval is one of the fastest ways to create disallowed costs. The complete list of items requiring prior approval sits in 2 CFR 200.407.⁴

The Documentation That Gets You Paid

Every reimbursement claim comes down to the paper trail. For each expense you need two pieces: proof of what was purchased and proof that your organization paid for it. That means an itemized vendor invoice or receipt showing item, quantity, unit price, and date, plus a cleared check (front and back), a bank statement line, or equivalent evidence that the money left your account. A credit card slip with just a total does not qualify, because it doesn’t show what was bought.

Payroll and Personnel

Salaries are usually the biggest line, and the standard is strict. Charges must come from records that accurately reflect work performed and are supported by your internal controls.⁵ The records have to cover an employee’s total work activity across all funding sources, not just the grant.

Budget estimates alone don’t support a salary charge. Estimates can carry interim accounting if the system produces reasonable approximations, significant workload changes get recorded promptly, and periodic after-the-fact reviews confirm the final charges are accurate.⁵ Payroll records should show gross pay, withholdings, and net pay for each employee charged.

Procurement

How you buy things matters too. The Uniform Guidance sets procurement methods by dollar value, from micro-purchases (up to $15,000 as of 2026, awardable without competitive quotes if the price is reasonable and documented) through simplified acquisitions requiring quotes from an adequate number of qualified sources, up to formal sealed bids or competitive proposals above the simplified acquisition threshold.⁶ Skipping competitive quotes on a purchase that required them creates an audit finding even when the price you paid was fair.

Your Accounting System

Your financial management system has to identify each federal award separately, track expenditures against budget for each award, and hold source documentation for every transaction.⁷ Most organizations do this with a dedicated cost center or account code per grant, linking every expense to both the grant and the correct budget line. That’s what makes a clean reimbursement request possible.

Submitting the Payment Request

Once you’ve incurred, paid for, and documented costs, you file a formal request. Many agencies use Standard Form 270 (SF-270), “Request for Advance or Reimbursement,” or an equivalent electronic system.⁸ On the form you select “Reimbursement” as the basis and usually “Partial,” unless it’s the final request at closeout.

The form reports total program outlays for the period on a cash basis, meaning only expenses you’ve actually paid. Agency staff check it against your approved budget and period of performance. Wrong totals, missing signatures, or costs booked to the wrong category get the package returned for correction and restart the clock.

Here is where the 30-day rule bites. Once the agency receives a proper, complete payment request, federal regulations require payment within 30 calendar days. The agency can withhold only if it reasonably believes the request is improper.¹ Payment arrives by electronic funds transfer to the account tied to your SAM.gov registration.

Watch that registration. It must be renewed every 365 days.⁹ If it lapses, the agency cannot pay you until you renew, no matter how clean your request is.

Financial Reports Are Separate From Payment Requests

Payment requests reimburse specific expenses. Financial reports give the agency the big-picture view of the award. They are separate obligations, and missing either creates problems.

The standard form is the SF-425, Federal Financial Report. Agencies must collect these no less than annually and can require them quarterly. Quarterly and semiannual reports are due 30 calendar days after the reporting period ends; annual reports are due within 90 days.¹⁰ The final financial report is due no later than 120 calendar days after the period of performance ends.¹¹ Late or missing reports can trigger specific award conditions, including moving your other grants from advance payment to reimbursement-only.

When a Cost Is Disallowed

If the agency decides a claimed cost fails allowability or isn’t properly documented, it disallows the expense. You do not get reimbursed, and if you were already paid, you may have to return the money. A disallowance in one period usually leads to closer scrutiny of later requests.

Noncompliance remedies escalate from there. The agency can temporarily withhold payments while you take corrective action, disallow costs for specific activities, suspend or terminate the award, or initiate debarment proceedings that would bar your organization from future federal funding.¹²

You can push back. When an agency starts a noncompliance remedy, it must give you an opportunity to object and submit information challenging the action, and federal agencies are required to maintain written procedures for objections, hearings, and appeals.¹³ Ask for the agency’s dispute resolution procedures as soon as you get a notice.

Closeout: Your Last Window to Get Reimbursed

When the period of performance ends, you have 120 calendar days to submit all final reports and liquidate remaining financial obligations. Subrecipients get a tighter 90-day window.¹¹

Liquidating obligations means paying vendors and employees for work performed during the period of performance and then filing your final reimbursement request. Administrative closeout costs, such as preparing final reports, can still be charged through the due date of those reports even though the period of performance has ended.² Any unobligated funds already paid to you must go back promptly.

If you miss the 120-day deadline, the agency can close out the award based on whatever information it has. That rarely favors you. Treat closeout as the final phase of the project, not an afterthought.

1
eCFR. 2 CFR 200.305 – Federal Payment
2
eCFR. 2 CFR 200.403 – Factors Affecting Allowability of Costs
3
eCFR. 2 CFR 200.308 – Revision of Budget and Program Plans
4
eCFR. 2 CFR 200.407 – Prior Written Approval (Prior Approval)
5
eCFR. 2 CFR 200.430 – Compensation – Personal Services
6
eCFR. 2 CFR 200.320 – Procurement Methods
7
eCFR. 2 CFR 200.302 – Financial Management
8
Grants.gov. SF-270 Request for Advance or Reimbursement
9
SAM.gov. Entity Registration
10
eCFR. 2 CFR 200.328 – Financial Reporting
11
eCFR. 2 CFR 200.344 – Closeout
12
eCFR. 2 CFR 200.339 – Remedies for Noncompliance
13
eCFR. 2 CFR 200.342 – Opportunities To Object, Hearings, and Appeals