6HQLRU 0DQDJHU (QJLQHHUHG &DUELGH 3URGXFWV 5RFN 'ULOOLQJ 7RROV 7RS +DPPHU '7+ &DVLQJ $GYDQFHPHQW 28 SEPTEMBER 2021 WorldWide Drilling Resource® Drilling Into Money Not Boring by Mark E. Battersby Where is Today’s Funding? With many of the government programs which helped drilling businesses survive the pandemic exhausting their funding - or about to - where is today’s financing going to come from? Fortunately, for every drilling operation and business with a good track record, before and hopefully through the recent economic downturn, there are a number of options. Traditional bank loans continue to be difficult to obtain for many small businesses although they remain a great starting place when seeking funding. For those drilling operations that do qualify, lower interest rates, fees, and better terms may offset the personal guarantees and risks often associated with bank and Small Business Administration (SBA) funding. Locally owned banks are a great resource for small business financing because of their strong interest in economic development within the community. There are about 5000 community banks in the U.S. and, prior to the pandemic, according to the Federal Deposit Insurance Corporation (FDIC), locally owned community banks held 36% of small business loans. For those whose poor credit or lacking collateral, exploring alternative lenders might be necessary. The SBA is one option for drilling businesses which don’t meet the strict lending criteria of traditional banks. Although usually more expensive, equipment financing is ideal for any business needing hard assets quickly, but can’t afford to purchase them outright. Equipment financing is available, not only from banks and with SBA guarantees, but from nontraditional lenders, including dealers and distributors, offering targeted financing programs. Thanks to changes by both the Internal Revenue Service and the Securities and Exchange Commission (SEC), Crowdfunding is helping many small businesses. Crowdfunding, which relies on investors, can help get an idea, project, or business off the ground, often rewarding investors with perks and/or equity in exchange for cash. Although the popularity of Crowdfunding has increased, there are caveats. With equity Crowdfunding, where investors are given a stake in the business, there are strict SEC regulations both the business and investors must follow. Somewhat less regulated, so-called funding “platforms” are an increasingly popular door to Internet financing. With an online or alternative lender, bad credit is not always a barrier to getting the needed financing. Obviously, every drilling business owner seeking to borrow faces many challenges. Alternative funding options may be a good fit in many situations, but professional assistance steering drilling professionals and their drilling operation through the maze of today’s funding options - and in applying - may prove useful. Mark Mark E. Battersby may be contacted via e-mail to michele@ worldwidedrillingresource.com
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