Merchant Cash Advance in the Permian Basin

How the Basin shapes cash flow

The Permian Basin, in western Texas and far southeastern New Mexico, is the highest-producing oil field in the country. It averaged 4.2 million barrels of crude oil a day in 2019. Small businesses in the area, from diners and motels to welding shops and parts counters, feel activity levels in their own sales, often with a delay.

When work picks up, the payroll goes up first. New hires are paid weekly, parts are bought on short notice, and receivables from larger customers can take weeks to arrive. When work eases, the fixed costs stay. A merchant cash advance is built for exactly this timing mismatch because it is a revenue-based form of working capital.

What a merchant cash advance is, in plain terms

A merchant cash advance is funding extended against a business's revenue rather than against a particular piece of equipment or real estate. We fund $25,000 to $5,000,000. How an offer is structured, and what repayment looks like, is spelled out in the offer itself, and you should read it closely before you accept. We do not quote terms on this page.

It is one tool, and it fits some situations better than others. It is worth comparing it with the other options you have.

When owners in the Basin reach for it

• A new contract needs people and materials mobilized weeks before the first invoice is paid.
• A slow quarter leaves payroll and rent due while receivables are still out.
• An unexpected repair on a work truck or compressor cannot wait.
• A seasonal lull in the local hospitality and retail trade needs bridging.

A short checklist before you decide

1. Write down what the money is for and when it will start to pay you back through revenue.
2. Compare it to what the same need would cost on credit cards or a bank line, if you have those options.
3. Check whether the amount is sized to the gap and not to the maximum.
4. Read the full offer, including repayment mechanics, before accepting.

A slow-quarter example, with invented numbers

For illustration only: a parts and supply counter normally covers $60,000 a month in payroll, rent, insurance and vendor bills. A customer that represents a large share of its sales delays payment for six weeks. The counter is still owed the money, but the next two payrolls fall due before it arrives. The question for the owner is not whether the business is sound. It is how to carry fixed costs across a delay that was not in the plan.

A revenue-based advance can be sized to that gap. The risk to watch is borrowing more than the gap requires, because repayment is tied to the revenue the business takes in, and a slow period will not shrink it automatically.

Geography and eligibility

This page uses our grouping of the Basin: Andrews, Borden, Crane, Crockett, Dawson, Ector, Gaines, Glasscock, Howard, Loving, Martin, Midland, Mitchell, Pecos, Reagan, Reeves, Upton, Ward and Winkler counties. It is an editorial grouping rather than an official state region. Businesses anywhere in Texas can apply, and sole proprietors can too. Start on the application page.