Once or twice a year I have a financing project that just seems to all fit in place quickly. Many non-traditional lenders are eager to do business with companies providing services and materials to the Eagle Ford Shale Oil and Gas play in South Texas
Non-traditional lenders, like purchase order financing companies, asset-based lenders, equipment suppliers, and subordinated debt lenders, want to put their money to work and in our current economic situation, there are no industries growing as fast as the hydraulic fracturing industry and oil / gas exploration in general.
When companies come to me for financing, they know pretty closely how much financing they need but often they are surprised at how I put the financing package together.
I spent much of the past two weeks putting together a financing program for a company that distributes hydraulic fracturing chemicals and materials.
Instead of one financing source, I recommended that various assets the client wanted to finance be handled in different ways. In my 18 years of banking or being a financial intermediary I have used this technique effectively. Separating the financing in various pieces saves the client a great deal of money in equity they may have had to give up. It also reduces the real and contingent risks associated with the financing. It also makes the various financing “modules” scalable which is important to companies growing exponentially.
I have set up a significant number of international irrevocable letters of credit. In this case, my letter of credit (LOC) provider was excited about being able to provide the international financing piece I needed. My LOC provider is financing many companies that are importing materials and equipment into the Eagle Ford Shale and other North American shale plays.
I was able to begin setting up the main form of financing for the company’s greatly expanding A/R and Inventory with a strong nationally known asset based lender. They have extensive experience financing hydraulic fracturing material suppliers in the Marcellus Shale play in Pennsylvania and who is eager to begin financing companies providing materials and services in the Eagle Ford Shale play.
I easily found an equipment financing vendor who is prepared to finance the fork lifts and racking to store inventory in a location convenient to both the Eagle Ford Shale play and also the Permian Basin Shale play.
Very fast growing companies often don’t realize that segregating the assets they wish to finance will give them flexibility to continue exponential growth over a long period of time. I am an expert in arranging this type of financing for fast growing companies. If your company needs working capital for growth, equipment financing, international irrevocable letters or credit, or even real estate financing, I am happy to discuss with you how I would structure your financing needs.