Working Capital in the Golden Triangle and Southeast Texas

A corridor built on oil and water

The Beaumont-Port Arthur area, known as the Golden Triangle, is a three-county region in Southeast Texas between the Houston area to the west and Lake Charles, Louisiana to the east. The name refers to the wealth from the Spindletop oil strike near Beaumont in 1901 and to the triangle between Beaumont, Port Arthur and Orange. This page covers Hardin, Jasper, Jefferson, Newton, Orange, Polk and Tyler counties.

Contractors, fabricators, industrial service companies and the restaurants, motels and shops that serve their crews fill much of the local business landscape. Their cash cycles are tied to plant schedules, project awards and, every summer, the weather.

Cash-flow patterns in this corridor

• Project contractors pay crews and buy materials weeks before a draw or an invoice is paid. Non-residential original contractors in Texas generally have until the 15th day of the fourth month after the month work was completed to file a lien affidavit with the county clerk (Tex. Prop. Code 53.052); that is a legal option, not a payroll solution, and this is not legal advice.
• Turnaround and maintenance work arrives in bursts with quiet gaps between.
• Restaurants and shops near work sites depend on crews being in town.
• Hauling and equipment-rental businesses pay fuel, tires and repairs on short terms.

The hurricane-season line item

The Atlantic hurricane season runs June 1 to November 30. For a Gulf Coast business, a closure or evacuation is a regular planning scenario, and the costs of payroll, rent and loan payments continue. The most useful question for an owner is how many weeks of fixed costs the business could carry with no sales at all, and whether it has them.

Three questions before sizing the request

1. How long is the longest gap between paying for the work and being paid for it?
2. Which customers are responsible for the slowest payments, and how reliable are they?
3. Is the gap temporary, tied to a job or season, or is it permanent?

A request that answers these is much easier to evaluate than one that only gives a round number.

An illustration of a project gap

For illustration only, with round numbers that are not our terms: a fabrication shop wins a job requiring $55,000 in steel and labor, billed at completion with payment 30 days later. Across six weeks of work and a month of waiting, the shop pays out most of the $55,000 before it collects. If a storm closes the shop for a week in the middle, the gap grows. A sound request considers both the base case and the delayed case.

The funding facts

The application takes about five minutes and uses a soft credit pull. Amounts run from $25,000 to $5,000,000, and funding can arrive in as little as 24 hours. Sole proprietors can apply.