WorldWide Drilling Resource

Hi Ronnie, I have been a reader of your publication for a very long time and I really enjoy it. I even met you and some of your team at a conference in South Florida. I'm a hydrogeologist, not a [drilling contractor], but I do know my way around a drill site and wells. There is always interesting stuff in each issue of your publication. I have been meaning to drop you a line for quite a while to tell you something you may find a little odd: I really appreciate your "In Memoriam" section. There are so many people who work hard all their lives and never get officially/professionally recognized by their peers in life. I personally enjoy reading about these hardworking folks who I have never met and seeing the contributions they have each made to the industry and society in general. I read every announcement slowly and carefully, and try to connect in some way with that person's life. Through this section and your publication you are sharing their legacy with the world. Thank you for doing that and honoring each of them in this way. Wishing you and your entire staff many blessings. Regards, Jim Reader’s Response My special thank-you, Jim. Veronica I. “Ronnie” Jones on behalf of the WWDR Team. Drilling Into Money Not Boring by Mark E. Battersby The Real Cost of Borrowing With many larger businesses reducing their borrowing after the initial buying spree which resulted from the write-offs generated by the Tax Cuts and Jobs Act (TCJA), there is increased attention on small business lending. Still to be answered, however, is the all-important question of what it actually costs to fund the operation or the expansion of the drilling business. Two factors impact how much a business loan will cost: the interest rate charged and the fees required before, during, and after the loan process. They combine to create the annual percentage rate (APR), which is the cost of the loan every year a balance remains. All-too-often a loan agreement requires borrowers to maintain compensating balances and pay a number of fees. Among the most common fees are: - Packaging fee: Assistance isn’t cheap, and when received from a third-party, the drilling business may be charged a fee for assembling the required documen- tation. - Processing/Application fee: The processing fee compensates the lender for the time, work, and expertise required to complete credit checks of both the busi- ness and the owner. - Closing costs: Closing costs are usually associated with mortgage loans and can include, but are not limited to, expenses such as attorney fees, title search, realtor fees, etc. - Maintenance or servicing fees: These are fees the lender may charge on an ongoing basis (monthly, quarterly) to service a loan, i.e. handling payments, send- ing out notices, etc. And there is a fee unique to U.S. Small Business Administration (SBA) programs: - SBA Guaranty Fee: The drilling business/borrower usually reimburses the fee the lender is required to pay to the SBA. Similar to “points,” this fee is based on a percentage of the amount of the guaranty the SBA is providing. Before shying away from borrowing, every drilling professional should remem- ber there are also costs associated with not borrowing, the so-called “lost opportu- nity” cost. And, don’t forget business interest expenses can’t be deducted in excess of 30% of the operation’s income. Fortunately, the new 30% limitation does not apply to small businesses with average annual gross receipts of $25 million or less. Obviously, taking out a business loan is a big step. However, by calculating the cost of all available loan options and shopping around to find both a willing - and affordable - lender, every drilling company can make a smart borrowing decision that will help their operation grow and prosper for years to come. Mark Mark E. Battersby may be contacted via e-mail to michele@worldwidedrillingresource.com Atlantis Vault • Self-Contained • Simple installation • Trouble-free operation For more information call: (270) 786-3010 or visit us online: www.geothermalsupply.com 24 APRIL 2019 WorldWide Drilling Resource ®