An energy production loan is used to fund energy production equipment. This loan is designed to fund the cost of energy production equipment for a business, helping a business meet the energy needs of the country.
The terms and conditions of an energy production loan are based on the credit worthiness of the business making the loan. Interest rates charged can be fixed or variable and take into account any potential loan default or other risk to the lenders. The interest rates and other loan terms are expressed in the loan agreement executed between the borrower and the lender.
Types of Energy Production Loans
An energy production loan funds capital equipment that will lose value over time. This loss in value means that the business must have a way to recover their costs associated with the loan. This is done through the use of a depreciation schedule. Over the time that the energy production equipment is in use, the cost of the loan is deducted as a business expense by the borrower. At the end of the loan’s period, most all of the costs associated with the loan will have been recovered by the business.
Types of Energy Production Loan Borrowers
Businesses are the typical borrowers for an energy production loan. Specifically, those businesses that are involved in offshore platform drilling and other energy production activities. The borrower uses the loan’s proceeds as a way to fund the purchase of the equipment, which is depreciated in value over the length of the loan’s period.
Some important items to know to finance your are:
- How much money do you really need?
- Do you know your exact FICO scores?
- How do you plan to repay the loan?
- Who is going to borrow the money? You personally or another legal entity?
- What assets can you pledge to secure your loan?
Make sure you know you are pre-qualified before you apply. Our free business capital search engine will allow you to see the funding programs and lenders that are available to you and then you choose those you wish to apply for.