If you are looking for capital for oil companies, you need to do your research understanding that the average oil consumption in the United States is 20 million barrels per day. This drastically compares with oil production, with the United States producing approximately 6.5 million barrels per day daily.
Further, oil consumption in 2018 in the United States grew at a rate of approximately 1.5 percent. This was well above the average of 1.2 percent over the last 10 years.
With these kinds of numbers, the oil industry will hold a nice growth spurt in the coming years, and this is leading to the launch of many new oil companies. Those oil companies need new capital.
If that’s you, then find out everything you need to know about the best methods to secure capital for oil right here.
Getting Capital for Oil in the United States
There are a number of different ways to get capital for oil in the United States, and they range from conventional to unconventional methods.
In the United States, approximately 194 billion is invested as capital for oil companies since 2010. To date, it is estimated that approximately 49 percent of that is used, and 45 percent is currently in the planning phase.
If you are looking for capital for oil in the United States, you’ll need to stay on top of the hottest oil and gas industry trends of 2020. Learn these trends, commit them to memory, and discover how to get in on them.
This is vital information you will need when you begin seeking capital. Once you learn the trends, you can begin researching the kind of capital for your oil company that you want.
Types of Capital for Oil in America
In traditional financing for any kind of loan, you likely only need a good credit rating, and/or a co-signer. In the oil industry, you just need to be able to prove that you can pay the money back, or, secure a good income for a potential investor.
The most traditional kinds of capital for oil are bank loans and lines of credit. A bank loan will typically come with an interest rate of 6 to 10 percent, and a term of 3 to 7 years.
A line of credit is very similar when it comes to terms, but you will probably have a higher interest rate, and a shorter term.
Other kinds of capital come in the form of cash advances or in investors. But you really need to know exactly what you need capital for, as there are various forms of capital for oil companies for very specific things.
A traditional loan is possible from a bank, but you may also want to look into specific financing, such as equipment financing or building financing.
Working capital loans, same day cash loans, and bridge loans are also possible. A bridge loan, for example, is a loan that you get to float you financially until another financing comes through.
Your financing might be used for everything from building a pipeline to looking for deposits. No matter what stage of business you are at, you are going to need capital to do it.
Let’s have a look at the different kinds of oil financing in more detail.
Seeking Investors
When you are looking for capital for oil, the least risky method is to first ask people that you know for money. This is called, asking for investors.
You can start by asking your family and friends, or at least just getting the word out. You may want to plant a bug in someone’s ear, or in many people’s ears, to seek investors.
Before you do, you need to take stock of the state of your relationship, and see if it can withstand the test of money coming in between you. Also, before you ask, you need to have a solid plan for them.
Approach them as if you are approaching a bank. Don’t just ask them for money.
Have a prospectus ready, and have numbers crunched already for them ahead of time.
After that, you can also look into getting angel investors. These are people that make a living out of investing in companies that will do well.
Oil is something that is being consumed in America at a rate that ranks America in the world as a leading consumer. You will always make money in oil, and there are always investors looking to invest in oil.
You’ll need a professional prospectus for investors as well. After that, you want to consider a bank loan.
Bank Loans
Banks are an obvious source of financing for capital, and are always eager to invest in an industry that is thriving. Oil is one of those industries.
In fact, banks are a primary source of capital for all oil businesses and are very familiar with the industry. These loans are generally low interest because your bank knows that you will do well.
Expect to see terms at approximately five years, with plenty of returns that will pay your capital off in the long-term.
Component Financing
If you don’t need a lot of capital or don’t want to go too deep into debt, you can ask banks or lenders to just provide capital for parts or components. If you only need to buy equipment, then you can save some money on interest costs and debt, by only borrowing the absolute least amount that you need.
This will help you get what you need to run your oil rigs or run equipment to run your business.
In many cases, leasing options are also available which will also cut down your costs.
Invoice Loans
Another way to get capital for a loan is to use invoice loans. In this capital funding, you get financing based on the income that you expect to receive.
It is a very common way to get capital for oil companies, and it happens all the time. This is also called invoice factoring.
It works in a very similar way that a payday cash advance does, but isn’t so restrictive with payment terms. You get immediate cash, for cash that you would expect to get in the future.
You might get a certain percentage of your invoice, such as 90 percent, and have terms where you pay it back within 30 to 90 days. The advantage of this is that you don’t go into debt, and you don’t have your credit score impacted.
Most invoice factoring companies will look at the credit of your customers who are paying your invoices, as opposed to your own credit.
When you are looking into invoice factoring, investigate the oil and gas funding challenges to overcome as you build your capital.
Cash Advance
At the end of the day, if you have exhausted all other options of seeking capital for oil businesses, you may need to just go to the straight cash advance option. This is like a payday advance, where you take your expected income to a bank or lender, and ask someone to give you an advance on it.
In oil, these are often called merchant cash advances. These are usually done with very little paperwork, and the money is received quickly.
Lenders know that oil companies will succeed, so it is not difficult to get these loans or this kind of capital. But you will likely pay a higher interest rate, and find yourself behind on your money matters more than you are ahead.
Lock-In Oil Capital Today
When you are looking for capital for oil companies, you are going to have a lot of options. But you also will not have a difficult time getting it.
Oil is successful. It is the most produced and the most consumed product in the country.
You will always have customers. And, investors like it because they win too. Everybody wins in oil.
The United States is a leader in the world in both the production and consumption of oil. In 2018, America produced 669 million metric tons of oil, making America the world’s ninth-largest oil reserves in the country.
America ranks number one when it comes to consumption as well, and consumed over 900 million metric tons of oil in 2018. Every time that you fill your car up, you are contributing to the industry.
Now imagine that contribution happening millions of times a day, all across the nation. Now imagine having a piece of that pie.
Start getting your prospectus ready when you are seeking capital for oil, and consider a solution where you don’t need a personal guarantee. Contact us now to investigate our capital for oil process, and you may have your funds in as little as 30 days.
