Commercial Financing For Self-Charter

[capn_cranky]

Ahoy cruisers!,

capn_cranky here. My partner and I are in the process of getting our ducks in a row and making the move down to BVI (from Canada) to open a charter business as liveaboards.

Financing has been a headache since CDN lenders won't lend for foreign assets and US lenders won't usually lend to non-citizens other than in a 'cash-collateral' deal where you lend the bank money and they lend it right back to you... which isn't that helpful. We will be making an asset purchase as per lawyer in order to prevent liabilities when we restart the seller's business afresh. Any financing suggestions are welcome.

Cheers!,
capn_cranky

[skipmac]

No magic answers. As you are finding, boat financing is difficult and financing for a privately owned charter boat even more so.

Generally boats are seen as a high risk loan by banks for many reasons: high depreciation, hard to sell, down market, very portable so easy to "lose" the collateral, high risk of loss or damage, etc, etc, etc.

Pretty much as you noted, if you have enough money that you don't need a loan to buy a boat then the bank will loan you the money.

If you own a house you can try for a home equity loan.

[mkjhartmann]

Look for a "hard money" private lender. And then buckle in for the interest rate terms they hit you with. I am in the investment business, I don't think anybody else would touch this. And make sure you have a great business plan to that sets you apart, because a few others have had the idea of running charters in the BVI.

[dan360]

Yep - hard money rates start at 9-10% with a 2% fee (on the whole principal amount) for origination and go up from there.