Oil and Gas Loans

Throughout this blog, we will help you explore and learn about oil and gas loans so that you can make an educated decision. 

What are oil and gas loans?

Oil and gas companies often use oil and gas business loans to expand investment capability, improve cash flow, make large purchases, finance inventory, and more.  While there are many types of ways to finance an oil and gas business, a business loan is one of the best options, especially for small businesses or startups. In most cases, lenders require monthly repayment determined by a pre-set schedule. However, repayment terms and interest can vary and should be assessed on an individual basis. In some cases, lenders or the SBA may defer payments for small businesses or startups to allow them some time to get going. When applying for most business loans lenders analyze the risk associated with your business and the loan to determine the proper loan structure and amount. Oil and gas companies often use business loans for development drilling, capital expenditures, production, payroll, and so on.  If you are looking for a low interest and flexible flooring company loan you should consider a business loan. In the next section, we will go into more detail about how a business loan works. If you are looking for a way to finance smaller day to day purchases, a business credit card may help. Business credit cards usually have higher interest rates and lower spending limits. For the most part, all oil and gas company loans should allow you to spend the money on just about anything business related.  If you are a business owner looking to finance some living expenses you may want to look into a personal loan. Personal loans are fairly easy to qualify for and offer low interest rates. They can be a great way to cover personal expenses until your business is profitable enough to pay yourself a monthly salary. Starting a new business may be challenging but if you can overcome the challenges, you are sure to be rewarded in the long run.

How does oil and gas financing works?

Oil and gas business loans offer companies capital of up to $500,000 and terms up to 25 years. Most lenders will issue the loan fund as a lump sum. Once the money has been issued, it should start accruing interest. In most cases, business loans have a fixed interest rate and monthly repayment terms. A fixed interest rate should not change during the loan term. This can be beneficial to the lender and the business borrowing money. If you have a fixed interest rate your monthly payment should be the same each month. This can help you plan ahead and avoid surprises. While most lenders do not require collateral to secure an oil and gas business loan, they may ask for a personal guarantee. When selecting a business loan offer and lender you should try to find a lender that does not have a prepayment penalty. This means you can pay the loan off early without extra fees or penalties. Paying the loan off early can help you save money by paying less interest. Business loans can help your business establish equity and revenue streams. Once your business has equity and consistent revenue, you may want to consider a business line of credit. If you use a business line of credit, you only pay interest on the amount of money you use rather than the entire loan amount. Most lenders require businesses to have at least 6 months in business and $25,000 in annual revenue to qualify for a business line of credit. You can get a business loan from the SBA or a bank or credit union or an online lender. Online lenders can offer faster approval and funding speeds and can be easier to qualify for.  Compared to banks and credit unions, online lenders typically offer just as competitive (if not more competitive) interest rates. PrimeRates is a secure website that makes finding the best business loan offer safe and easy. 

What are the reasons to apply for oil and gas company loans?

Although the oil and gas industry generates substantial revenue, many companies face challenges with costs, sustainability pressures, and investment concerns. For business owners, this means that they need to handle transitions and challenges effectively in order to remain successful in this complicated industry. Maintaining day to day expenses while investing in new equipment and new technology may cause cash flow problems. Using a business loan can help solve cash flow problems and allow you to invest in equipment, technology, and more. Even though you may have interest and fees tacked onto your business loan, you may be able to grow the money you borrow far beyond the total cost of the loan. Let’s take a look at the top reasons to consider financing and loans for oil and gas companies… 

#1. Cash Flow

Whether you are a big business or a small business, cash flow can be challenging. In most cases, a small business is more likely to struggle with cash flow. If cash flow problems are not addressed early on they can easily lead to failure. In order to stay current on all expenses and maintain healthy account balances, you will need to have fluent cash flow. A business loan is a great way to improve cash flow and keep extra money on hand or available. Business loans can help cover operational expenses and expansion costs while helping you keep your doors open when business is slow.

#2. Equipment

Maintaining equipment and staying up to date with the newest equipment is critical in the oil and gas industry. In some cases, maintaining equipment can be just as costly as buying new equipment. A business loan can help make maintaining and purchasing new equipment more manageable. If you are a business that relies heavily on equipment you’ll want to be sure you have enough cash on hand to fix it if something goes wrong. Business loans can help oil and gas companies purchase and maintain equipment while delivering better service and experiences for their customers. 

#3. Technology

Innovation is critical to success in the oil and gas industry. Creating a sustainable oil and gas company can give you the edge you need. Many older companies have been reluctant to innovate and transition into newer technologies. Investing in new technologies may be costly upfront but can help lower expenses in the long run. New technology can also help reduce employee constraints and increase productivity. A business loan is a smart way to finance new technology and make innovations more affordable. 

What are the pros and cons of oil and gas company loans?

Making well educated business decisions is critical for achieving success. This means it’s important to evaluate the pros and cons of oil and gas company loans. In our personal lives we may try to avoid borrowing money but in the business world it may be a necessity in order to grow. In addition, the intent with a business loan is to make more money using the money you borrow. This can help justify the extra costs associated with loans. Let’s compare some pros and cons for oil and gas company loans...

Pros:

• Accelerate growth
• Improve cash flow
• Advance technology

Cons:

• Repayments can be challenging
• Money may not solve all problems

What types of oil and gas company loans are available?

Business loans and SBA loans are some of the most common types of oil and gas company loans. If you are a small business you should look into an SBA loan. SBA loans are partially guaranteed by the government which can make these loans less risky for lenders. Since there is less risk, you may be more likely to qualify. Some SBA loans require some kind of collateral or money down and almost all SBA loans require a personal guarantee.

What are the requirements to qualify for oil and gas company loans?

If you are applying for a small business loan,  you should have a credit score of 700+.  Since your business may not have many assets or substantial revenue most lenders will want to ensure you can personally guarantee the loan. When you apply for most business loans, lenders will request financial documents, proof of income, bank statements, identification, and more. If you are a startup business you may be asked for even more documents and business plans. Before applying for a business loan you should gather important documents that you may be asked for. 

How to apply for oil and gas loans?

If you are considering an oil and gas loan you should apply online through PrimeRates. Many reliable lenders partner with PrimeRates to help companies receive competitive loan offers. Using PrimeRates can allow you to quickly and efficiently receive multiple personalized business loan offers within minutes. In addition, PrimeRates can reduce the risk of using an online lender. Your credit will not be affected by submitting an application through PrimeRates, so you really have nothing to lose and everything to gain. Here are 3 easy steps to apply for an oil and gas company loan…

#1. Submit application (takes less than 2 minutes)

#2. Select the best business loan offer

#3. Receive funds quickly (as soon as 24-hours)

Conclusion

PrimeRates partners with dozens of reliable lenders that specialize in business loans for oil and gas companies. Many of our lending partners can assist with additional financing as well. Before reaching out to multiple lenders on your own you should apply through PrimeRates. You can submit one quick application that will not affect your credit and within seconds you can receive multiple personalized loan offers. This will allow you to compare offers and select the lender with the best offer and appropriate expertise. PrimeRates offers a platform that can eliminate the risk involved with using an online lender while saving you tons of time and money.