33 MARCH 2024 WorldWide Drilling Resource® Drilling Into Money Not Boring by Mark E. Battersby Looking in all the Right Places for Funding The reluctance of many traditional lenders to provide the all-important working capital required by almost every drilling business is compounded by today’s high interest rates. Actions of the Federal Reserve have contributed to an increase in inflation and raised interest rates with no indication of substantial relief in sight. Given all these potential problems, it may seem strange to suggest every search for affordable funding should begin with the operation’s bank. Although numerous factors will impact the lender eventually chosen, the best option is usually to start with the bank currently used for company banking. Even without a personal relationship with the banker, the operation’s bank has a broader perspective of its debt, spending, and cash flow. While perhaps only a number in the bank’s system, the operation is already in the system. This puts the drilling professional one step ahead, even with a reluctant bank. While banks typically have low interest rates and offer competitive terms, financing may be hard to qualify for. Thus, an incentive such as a guarantee by the Small Business Administration (SBA) might help obtain the needed funding. SBA loans make it easier for businesses to get funds. The SBA offers lenders, mostly traditional financial institutions, a federal guarantee for the loans the bank issues. This makes it less risky for banks to lend and, despite a time-consuming application process, means more favorable interest rates and terms for the borrower. When traditional sources, even with guarantees, fail to provide affordable needed financing, it might be time to explore a relatively new option: online funding. With the reluctance of traditional banks to lend, online lenders are enjoying a surge of popularity. Online funding consists of two areas: interacting with a bank minus the human element, and independent lenders working outside the traditional banks. Online banking eliminates the cost of brick and mortar branches, thereby generating cost savings to be passed on to borrowers. Online banking is best for operation’s with bad credit that want fast funding and easy applications. However, in addition to higher rates for some borrowers, the arm’s length application process creates a potential pitfall for unwary borrowers. Every drilling professional seeking funding faces challenges such as: Where is funding available? What is the total cost including fees? Is the funding good for an extended period of time or can payment be demanded early? Guidance from a professional adviser may be necessary. Mark Mark E. Battersby may be contacted via e-mail to michele@ worldwidedrillingresource.com BBB Rating: A+ Click for Profile Here at Palmer Bit our goal is to: • Provide superior customer service. • Provide high-quality products. • 24-Hour turnaround on repairs. • Fastest lead times in the industry for new products. • Provide knowledge to help you choose the best bit for the formation you’re drilling in. Our lead time for small quantity orders is 1-3 business days; for large quantity orders, 3-6 days. We also customize bits to suit your needs. Please check out our website, www.palmerbit.com, or call us at 1-800-421-2487 with any questions. PDC Hole Opener Diamond Devil PDC Red Devil Step Type Red Devil Double Chevron
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