Marine Finance

Finance Your Marine Equipment

Boat sailing on lake Sneekermeer

Financing is a huge part of every business deal. A business plan without a means of sourcing financing can be likened to a boat without a sailor. Financing is the method by which a business idea or plan is brought to fruition. A vision without the requisite funds to get the said idea to life is simply a thought. Hence, financing allows people with knowledge, technical know-how, brilliant business ideas but have no means of providing the capital their businesses require to bring their business plans to fruition.

Usually, suppose a business must succeed in seeking finances for their activities. In that case, it must present a solid business plan to the appropriate financial institution they seek investment from and show that the business can yield profit. Although not all investments are made with the sole aim of generating profit, most are made to secure interests or ownership.

Banks are the primary and commonest financial institution, where business owners may seek financing. However, the drawback of seeking financial aid from the bank, especially in small-scale enterprises like the sole proprietor, is that they are an untested commodity, and banks mainly invest in well-known and trusted businesses. However, note that banks are not the only means of securing financing. We also have marine finance lenders, capital investors, etc.

There are two main types of financing; they include equity financing and debt financing. Equity financing means the owner gives up part ownership of the business in exchange for financing. In this sort of funding, the risk of whether the business folds or not rests on the investor. Debt financing, on the other hand, is one most people are pretty familiar with. It is a sort of financing that requires being paid back and yielding interest.

Marine Finance

The world marine refers to matters involving the sea, and as such marine financing can be said to be the means through which businesses involved with sea activities secure financial aid. Marine financing has to do with the acquisitions, repair, construction, and deconstruction of boats. Marine financing is also known as boat financing. In marine financing, you can acquire the money with or without collateral.

Benefits of Marine Finance

Due to reduced challenges in securing marine loans, there is an increase in the sea’s number of vessels. Such economic activities are increased, bringing a truckload of profit for those involved in one sea business or other cargo shipping.

In times past, the timeframe for the repayment of the loan was short and strict. However, in recent times, the loan duration has become quite flexible and can be tailored to suit the borrower’s financial capacity and can range from a year to up-to twenty years.

In recent times, the financing process has become more accessible and not as rigorous as before. There is no need to submit a large number of documents to be able to secure the loan. The acquisition is made while putting up collateral, and it is done without having to put up collateral.

The finance is secured can be tailored to the borrower’s demands. The monthly payment can be fixed in such a way that will enable the borrower to meet up with the monthly payments quite quickly without having to default on any payment as the rate at which the borrower is expected to pay back the loan has been tailored to the borrower income and not more than it.

The duration for the loan repayment is relatively short; the interest rate will be on the high side. However, in recent times whereby the period for the repayment of the loan can be as long as twenty years, the interest rate is relatively low in such situations.

Businessman Calculating Finances

What can you Finance?

Acquisition of a Boat

It aids in acquiring finance for those wishing to purchase a boat for whatever reason. It could be a cruise-line boat, a trawler, or a charter boat. It does not matter what sort of business the owner will use the ship for; marine finance is secured to help acquire a ship to aid the business owner.

Construction of a Boat

As marine financing aids in acquiring a boat, it can also help in the construction of a vessel tailored to the borrower's needs. This sort of financing is primarily for cargo ships. These are usually enormous ships and are used in carrying various types of goods ranging from cars to clothes.

Deconstruction of a Boat

After a boat has been on a voyage for a long time, it could be carefully dismantled and sold for parts. It is usually an expensive project.

Old Sunken Wooden Fishing Boat In River. Belarusian Nature

Insurance

After the boat’s purchase, there is a need to protect your acquisition from unpredictable circumstances, hence the need for an insurance plan that may cover every unforeseen event such as pirate, capsizing, and natural disaster like a hurricane, theft among others. In a situation where you cannot afford an insurance scheme, you may need to find financing.

Maintenance

Following the boat's purchase, various concerns may arise from fuel to storage to maintenance. Maintenance is an essential part of acquiring a ship, especially when the ship has to be repossessed. This means the boat has to be in top shape at all times, hence the need for maintenance.

Financing Options

There are various means through which one may start the process of marine financing. It could be through the more popular banking institutions, marine finance companies, capital investment, etc. However, in acquiring funding for a boat, the initial purchase is not the only matter that is considered but includes the cost of fuel, upkeep, and insurance.

Commercial Financing

Commercial financing is one of the means through which businesses acquire funds. You can seek financing for two purposes: personal or commercial purposes. Although the general goal of commercial funding is to help enterprises grow irrespective of their capacity, the loan's purpose may vary from business to business. Nonetheless, the means of seeking commercial financing includes

Hire Purchase

Hire purchase is a means of commercial financing where business owners acquire property without having the necessary funds. Under hire purchase, the chattel is given to the borrower for use while making an instalment payment. The borrower, however, would have made a huge lump sum payment before subsequent instalments. The borrower retains the proprietary right in the goods while in possession. However, ownership does not pass to the borrower until after the instalment payment is made. Where the borrower defaults in payment, the lender has a right to repossess the good.

Leasing

At the end of a lease agreement, the lessee has several options to choose from. The lessee has the option of extending the lease agreement; the lessee could also give the good back to the lessor for repossession, or the lessee could provide an alternate buyer.

Marine Finance Calculator

Before requesting finances to purchase a boat, there are different variables to consider: fuel, upkeep, storage, and insurance. After the initial purchase and subsequent monthly payments, you need to ask if you will still have much to carry out general maintenance, purchase extra gadgets, or an insurance plan. All these should be put into consideration when deciding to get a loan. A marine finance calculator helps you put things in perspective. It allows you to discover a payment scheme that leaves you with room to breathe; it also considers your credit. The marine finance calculator uses the loan amount, which may vary if it is secured or unsecured, how long the loan's repayment will be, and the possible interest rate that may accrue on the loan. It helps you make an informed decision.

Frequently Asked Questions About Marine Finance

Marine finance is a personal or business loan acquired with the vessel acting as security for the loan. If the borrower defaults on the payment of the loan, the lender may repossess the boat. However, with a personal loan, there is no absolute surety.

You can indeed make lump-sum payments in marine finance before your due date if you have the funds. There is no penalty accrued to deviating from the initial instalment payment agreement. Lump-sum fees help reduce your interest rates.

Yes, you can. However, it is not advisable to always use your savings for further investment and aid when unforeseen events occur.

A marine finance calculator assists you in making a well-informed decision. It allows you to decide how much loan you want to collect and how long it will take you to make the payments with interest.

The cost of a boat depends on the type and size and can vary from location to location.

In recent times, the duration for the loan repayment maybe for as long as 20 years.

Analyzing finances

© Copyright 2021 - electrotech-aust