Financing, insurance and starting a business

[Leighaa13]

Originally Posted by mvweebles

When I did my training aboard my boat, I used a local (SF Bay) marine insurance agent who was very helpful. Doubt I'm telling you anything you don't already know, but given the Caribbean is one of the world's top charter destinations, I would think there would be some top-flight insurance agents in the area (and likely some dogs too) who could represent you faithfully to an underwriter. When I was active, my insurance agent was part of my professional services team (accountant, attorney, and insurance).



Good luck!!!


Peter

Thank you.

[Montanan]

Okay, so planning for day charters.

You are thus entering the entertainment business.

Be sure to develop relationships with resorts near the port that you will be stationing from as their concierge service can become your marketing agents, for a commission, of course, figure 15% because you are competing for their clients. Ditto as to the rental property managers as to placement of hardcopy professional brochures in their rental properties for guests to peruse and to be induced to make bookings, [put a unique promotional code onto each hardcopy that avails tracking of the source of the booking and thus the rebate of a commission to the rental property manager / owner]. Reward your marketing networks and the marketing network will reward you.

See if you can arrange for pick up and drop off at a dock or in the cove of a resort, or make arrangements for vehicular pickup and delivery to their abode, be that a resort, the cruise ship dock, or an AirBnB. Full service, from door to yacht and back to door.

Also, focus on obtaining a proper web presence with the booking agent websites that have optimized their key word / phrase search in Google for the island / port.

Success is all about marketing. Getting enough traffic to board your boat.

The key to day charter business is a obtain a continuous high volume of passengers and to maintaining reliable departure and return times, because your short, day voyage needs to fit tidily into the vacationer's schedule of activities and provide a couple of memorable sights and activities. The boat trip being one adventure during a day full of adventures. A lot of day charters will be with passengers of cruise ships, so your vessel's schedule needs to be managed around the cruise ships rigid arrival and departures.

Then make the trip, a fun, fun, fun and friendly time. Be the most amazing host and introduce strangers so that new relationships can be quickly and warmly established.

Nota Bene: The value of tips are directly correlated to the enjoyment provided.

The nature of the day trip is highly dependent on weather; reality check some or many of the day voyagers will likely be motion sensitive, and it may be their first time on a yacht, hence if the seas are at all rough voyage to sheltered waters and provide for sheltered swimming. A short sail past some scenic sites, to an interest destination, a short sail back, hopefully not just a return but instead a loop. You will settle into a routine of repeated, very close proximity waypoints.

From experience, often there is not a breeze or an unfavorable direction, thence it is motoring time which gets really boring quickly for passengers. That requires creative improvising to thence make the commute interesting.

Every day, when day chartering, you will need to become the entertainer and the entertainment. It is on you to make each short trip a memorable experience for each unique person on board, and that requires a special personality of person. You will need to particularly pay special attention to anyone who is not having a great time or who is reserved and not participating as flipping their experience to the be their best ever can be a wonderful and fulfilling challenge.

[Leighaa13]

Not trying to be rude or difficult but everyone has given me advice on our business but not actually answered my question of financial institutions or insurance. This is what I was really looking for information on. Who have you worked with for financing and insurance for your boat that is leaving the US. Can anyone help me with this? We have our business model set and our contacts, licensing etc. I’m just looking for financing companies that are more likely to finance you as well as insurance. I’ve gotten one answer in a pm that is actually helpful.

[Leighaa13]

Originally Posted by Montanan

Okay, so planning for day charters.

You are thus entering the entertainment business.

Be sure to develop relationships with resorts near the port that you will be stationing from as their concierge service can become your marketing agents, for a commission, of course, figure 15% because you are competing for their clients. Ditto as to the rental property managers as to placement of hardcopy professional brochures in their rental properties for guests to peruse and to be induced to make bookings, [put a unique promotional code onto each hardcopy that avails tracking of the source of the booking and thus the rebate of a commission to the rental property manager / owner]. Reward your marketing networks and the marketing network will reward you.

See if you can arrange for pick up and drop off at a dock or in the cove of a resort, or make arrangements for vehicular pickup and delivery to their abode, be that a resort, the cruise ship dock, or an AirBnB. Full service, from door to yacht and back to door.

Also, focus on obtaining a proper web presence with the booking agent websites that have optimized their key word / phrase search in Google for the island / port.

Success is all about marketing. Getting enough traffic to board your boat.

The key to day charter business is a obtain a continuous high volume of passengers and to maintaining reliable departure and return times, because your short, day voyage needs to fit tidily into the vacationer's schedule of activities and provide a couple of memorable sights and activities. The boat trip being one adventure during a day full of adventures. A lot of day charters will be with passengers of cruise ships, so your vessel's schedule needs to be managed around the cruise ships rigid arrival and departures.

Then make the trip, a fun, fun, fun and friendly time. Be the most amazing host and introduce strangers so that new relationships can be quickly and warmly established.

Nota Bene: The value of tips are directly correlated to the enjoyment provided.

The nature of the day trip is highly dependent on weather; reality check some or many of the day voyagers will likely be motion sensitive, and it may be their first time on a yacht, hence if the seas are at all rough voyage to sheltered waters and provide for sheltered swimming. A short sail past some scenic sites, to an interest destination, a short sail back, hopefully not just a return but instead a loop. You will settle into a routine of repeated, very close proximity waypoints.

From experience, often there is not a breeze or an unfavorable direction, thence it is motoring time which gets really boring quickly for passengers. That requires creative improvising to thence make the commute interesting.

Every day, when day chartering, you will need to become the entertainer and the entertainment. It is on you to make each short trip a memorable experience for each unique person on board, and that requires a special personality of person. You will need to particularly pay special attention to anyone who is not having a great time or who is reserved and not participating as flipping their experience to the be their best ever can be a wonderful and fulfilling challenge.

Thank you for your advice. We pretty much have this all set up. Just looking for recommendations for financing and if one company is better than another. Same with insurance companies.

[zstine]

I don't have direct knowledge of a lender or insurance co. However, you will be setting up a DBA in the USVI and will need to meet local requirements for insurance. SO I would contact an insurance broker in the USVI that has local knowledge... and if you have a Business plan, you of courses have already contacted the local government to find out the requirements (permits, fees, insurance requirements, etc) for running said biz.

Also you said you have cash as collateral. I would recommend paying outright for the boat if you have the cash. Finding a lender for a non-experienced charter boat with no history of income is going to be a lofty goal and if you succeed you will likely have crappy terms.. buy in cash

I believe for an uninspected vessel you are limited to 12 passengers including captain/crew. just an fyi.

[Shrew]

Judging by the number of snorkel boats and booze cruise cats that are down there, I'd guess that this business model is certainly possible.

Id start with agents in the area you are planning on operating.

[Montanan]

Your source of insurance and financing will both be highly dependent upon which country in which the charter business resides because both types of services will likely require that the firm will be registered and licensed to provide such services within the jurisdiction.

Also the nationality [flag state] of the vessel will have a factor in determining the securitization of a priority lien on the vessel and under which maritime law regime the vessel will be subject to administratively when operating in international waters.

If you are providing day charters then it is highly unlikely that the vessel will travel out into international waters and thus will be constrained to the jurisdiction of the nation state it resides in as it will be just coastal cruising and returning to its port of departure.

Maritime law is unique as to liability and as to financing.

Some financial and insurance institutions have capacity to operate in many jurisdictions, others will be limited to one country, or just a narrow region.

Simple matter to Google search for yacht mortgage financing and insurance within a specific country. As to a specific Caribbean country, I would strongly advise just contacting commercial yacht brokers in that country and they will provide a list of both insurance brokerage firms and underwriters that will underwrite policies and which financial institutions will engage in mortgages in that country.

Or you could go shot gunning and contact firms to see if they indeed can and have interest in making market in said country. Or at least, provide referral to those that can. For example: https://marineins.com/charter-boat-i...medical%20care.

Wallace Welch & Willingham are proud to be West Florida’s largest Marine Insurance Agency. As one of the largest Florida boat insurance companies, our policies are tailored to the specific boat insurance needs of our Florida clients.

We are licensed to provide Boat Insurance and Yacht Insurance Coverage in all Florida Counties, including:

Pinellas County
Hillsborough County
Pasco County
Polk County
Manatee County
Sarasota County
Lee County
Collier County
Citrus County
Hernando County
Hardee County


The world is big place, you need to be very specific as to where you wish to have a securitized asset financed and risk exposures underwritten. You absolutely need to get down into the weeds as to the details when it comes to who are licensed to operate and to not waste time with those that can't.

[Montanan]

If the USVI is the location for your charter business, perhaps contact the Virgin Island Charter League

Specifically as to their insurance brokerage.
https://vicl.org/boat-insurance/

About Virgin Islands Charter League – VICL
Since 1968 Has Been a Driving Force Behind Charter Vacations
Since 1968, the VICL has upheld a role not only as the U.S. Virgin Islands only professional charter organization; but also that of informational reference desk and advocate for our Territories local marine community. VICL has consistently promoted the charter business and done much to enhance the Virgin Islands’ reputation as having the best sailing waters in the world!

The U.S. Virgin Islands offers so much for yachting enthusiasts from our professional privately crewed yachts to our diverse secluded coves. Add these attributes to our warm year-round temperatures and ideal sailing conditions and you have the perfect location for the ultimate yacht charter vacation!

The VICL has been a driving force behind charter vacations since 1968. We are the singular point of reference for all charter vacation opportunities, charter business marketing, and tourism related inquiries. We also represent the best interests of the industry as it applies to all Governmental marine issues for the U.S. Virgin Islands.

The VICL also acts as an informational reference desk and advocate for our marine community. This includes businesses and individuals who would like to take part in our marketing opportunities throughout the year as well as our world renowned 3 day annual boat show.


Address:

5304 Yacht Haven Grande Suite 104
St Thomas, VI 00802

Tel: 340-774-5630

Email: director@vicl.org

[Tetepare]

Did you search the forums for insurance topics?

[jmschmidt]

I assume you are both US citizens who plan to own and operate a US Coast Guard documented vessel out of the USVI. Assuming you plan on carrying more than six paying guests onboard, you will need to employ a USCG "inspected" vessel. There are some very complex and expensive modifications, possibly costing tens of thousands of dollars, to ready any vessel not already certified for the type of operation you are contemplating. If your chosen vessel does meet these requirements, you will be required to maintain it in this condition and have regular inspections by the USCG to insure these requirements.

The designated master (or masters) must hold the appropriate USCG Merchant Mariner Credentials (MMC) to operate such a vessel. Any crew (wife) may also have to be credentialed as to their work onboard such as deck hand or food service.

There are some very complex US tax ramifications from living in or on your business. Living is personal and business is business. As with a house, your personal use and business use must be meticulously separated and accounted for. You can't just write off as a business expense all the costs associated with the operation and maintenance of the entire vessel if a portion of it is your fulltime or even part time residence. Either way it may be considered like a mountain cabin or seaside condo you rent out. You get fourteen days a year personal use, any more than that and you pay the rack rate like any other customer. Many people try to avoid and abuse this but trust me, it's not nice to try to fool the IRS.

Some of the above matters may restrict you from operating the vessel as a business in foreign waters, such as the BVI. For operating in US waters if the vessel is foreign built you may be required to obtain an exemption or waiver from the US Maritime Administration (DOT) to allow a foreign built vessel to be documented by the USCG for the appropriate commercial trade. The cost for the waiver only, the last time I checked, was $500 and the wait time was about six months. The waiver, if granted, and the almost all are, is valid for a specific geographical area of operation and is not transferable if the vessel is sold.

As for financing, if you had a fleet of vessels and a good working association with your business banker individual purchases of an additional or replacement vessel may be financeable but a “one off” purchase of a charter vessel by an untried beginner is probably out of the question unless you have substantial “off the water assets” such as unencumbered real estate (preferably income producing), securities portfolios or other hard assets to pledge.

Regarding insurance, liability coverage is required by just about every marina in the world now and required even to clear into some foreign waters. Liability coverage needs to include the removal of a damaged or derelict vessel in any area, foreign or domestic, and full hull coverage of the surveyed value would be required by any lender.

As an example, I recently sold my US flagged 47’ PowerCat which had been licensed and insured for charter in the BVI as part of a fleet. Just prior to Covid it was moved to Puerto Rico and chartered in another fleet as a 6-Pack. While my company owned the vessel I was insured personally for non-commercial use in the entire Caribbean and South Atlantic (meaning the Bahamas) except for the embargoed countries of Cuba, Haiti, Venezuela, and portions of Columbia. For charter operations it was insured for multiple licensed skippers, including myself, for up to 150 miles offshore.

I’ll take a chance and include my email address if you would like to chat. Contact me at jmschmidtjr@yahoo.com. Now late the hate mail began. You may also find my views and opinions on Trawler Forum under my business name ProMaritime, LLC.

All the best and good luck.

[Leighaa13]

Originally Posted by Montanan

If the USVI is the location for your charter business, perhaps contact the Virgin Island Charter League

Specifically as to their insurance brokerage.
https://vicl.org/boat-insurance/

About Virgin Islands Charter League – VICL
Since 1968 Has Been a Driving Force Behind Charter Vacations
Since 1968, the VICL has upheld a role not only as the U.S. Virgin Islands only professional charter organization; but also that of informational reference desk and advocate for our Territories local marine community. VICL has consistently promoted the charter business and done much to enhance the Virgin Islands’ reputation as having the best sailing waters in the world!

The U.S. Virgin Islands offers so much for yachting enthusiasts from our professional privately crewed yachts to our diverse secluded coves. Add these attributes to our warm year-round temperatures and ideal sailing conditions and you have the perfect location for the ultimate yacht charter vacation!

The VICL has been a driving force behind charter vacations since 1968. We are the singular point of reference for all charter vacation opportunities, charter business marketing, and tourism related inquiries. We also represent the best interests of the industry as it applies to all Governmental marine issues for the U.S. Virgin Islands.

The VICL also acts as an informational reference desk and advocate for our marine community. This includes businesses and individuals who would like to take part in our marketing opportunities throughout the year as well as our world renowned 3 day annual boat show.


Address:

5304 Yacht Haven Grande Suite 104
St Thomas, VI 00802

Tel: 340-774-5630

Email: director@vicl.org

Thank you

[Montanan]

Informative links:

USCG What passenger requirements apply to your vessel

https://wow.uscgaux.info/Uploads_wow...GuideChart.pdf


Code of Federal Regulations:

SUBCHAPTER T—SMALL PASSENGER VESSELS (UNDER 100
GROSS TONS)

https://www.law.cornell.edu/cfr/text...I/subchapter-T

46 CFR § 175.100 - Purpose.
CFR

§ 175.100 Purpose.
The purpose of this subchapter is to implement applicable sections of Subtitle II of Title 46, United States Code, which require the inspection and certification of small passenger vessels. The regulations in this subchapter have preemptive effect over State or local regulations in the same field.

§ 175.110 General applicability.
Link to an amendment published at 86 FR 73172, Dec. 27, 2021.
(a) Except as in paragraph (b) of this section, this subchapter applies to each vessel of less than 100 gross tons that carries 150 or less passengers, or has overnight accommodations for 49 or less passengers, and that -

(1) Carries more than six passengers, including at least one for hire;

(2) Is chartered with a crew provided or specified by the owner or the owner's representative and is carrying more than six passengers;

(3) Is chartered with no crew provided or specified by the owner or the owner's representative and is carrying more than 12 passengers; or

(4) If a submersible vessel, carries at least one passenger for hire; or

(5) Is a ferry carrying more than six passengers.



Middle of winter in Montana, would welcome spending time in the Caribbean again.

Godspeed

[Leighaa13]

Originally Posted by jmschmidt

I assume you are both US citizens who plan to own and operate a US Coast Guard documented vessel out of the USVI. Assuming you plan on carrying more than six paying guests onboard, you will need to employ a USCG "inspected" vessel. There are some very complex and expensive modifications, possibly costing tens of thousands of dollars, to ready any vessel not already certified for the type of operation you are contemplating. If your chosen vessel does meet these requirements, you will be required to maintain it in this condition and have regular inspections by the USCG to insure these requirements.

The designated master (or masters) must hold the appropriate USCG Merchant Mariner Credentials (MMC) to operate such a vessel. Any crew (wife) may also have to be credentialed as to their work onboard such as deck hand or food service.



There are some very complex US tax ramifications from living in or on your business. Living is personal and business is business. As with a house, your personal use and business use must be meticulously separated and accounted for. You can't just write off as a business expense all the costs associated with the operation and maintenance of the entire vessel if a portion of it is your fulltime or even part time residence. Either way it may be considered like a mountain cabin or seaside condo you rent out. You get fourteen days a year personal use, any more than that and you pay the rack rate like any other customer. Many people try to avoid and abuse this but trust me, it's not nice to try to fool the IRS.

Some of the above matters may restrict you from operating the vessel as a business in foreign waters, such as the BVI. For operating in US waters if the vessel is foreign built you may be required to obtain an exemption or waiver from the US Maritime Administration (DOT) to allow a foreign built vessel to be documented by the USCG for the appropriate commercial trade. The cost for the waiver only, the last time I checked, was $500 and the wait time was about six months. The waiver, if granted, and the almost all are, is valid for a specific geographical area of operation and is not transferable if the vessel is sold.

As for financing, if you had a fleet of vessels and a good working association with your business banker individual purchases of an additional or replacement vessel may be financeable but a “one off” purchase of a charter vessel by an untried beginner is probably out of the question unless you have substantial “off the water assets” such as unencumbered real estate (preferably income producing), securities portfolios or other hard assets to pledge.

Regarding insurance, liability coverage is required by just about every marina in the world now and required even to clear into some foreign waters. Liability coverage needs to include the removal of a damaged or derelict vessel in any area, foreign or domestic, and full hull coverage of the surveyed value would be required by any lender.

As an example, I recently sold my US flagged 47’ PowerCat which had been licensed and insured for charter in the BVI as part of a fleet. Just prior to Covid it was moved to Puerto Rico and chartered in another fleet as a 6-Pack. While my company owned the vessel I was insured personally for non-commercial use in the entire Caribbean and South Atlantic (meaning the Bahamas) except for the embargoed countries of Cuba, Haiti, Venezuela, and portions of Columbia. For charter operations it was insured for multiple licensed skippers, including myself, for up to 150 miles offshore.

I’ll take a chance and include my email address if you would like to chat. Contact me at jmschmidtjr@yahoo.com. Now late the hate mail began. You may also find my views and opinions on Trawler Forum under my business name ProMaritime, LLC.

All the best and good luck.

Thank you very much. We have definitely researched a lot of this information. We plan on starting off with a 6 pack and both us will be licensed. I will definitely be in touch soon to ask you some more questions.

[Leighaa13]

Originally Posted by Montanan

Informative links:

USCG What passenger requirements apply to your vessel

https://wow.uscgaux.info/Uploads_wow...GuideChart.pdf


Code of Federal Regulations:

SUBCHAPTER T—SMALL PASSENGER VESSELS (UNDER 100
GROSS TONS)

https://www.law.cornell.edu/cfr/text...I/subchapter-T

46 CFR § 175.100 - Purpose.
CFR

§ 175.100 Purpose.
The purpose of this subchapter is to implement applicable sections of Subtitle II of Title 46, United States Code, which require the inspection and certification of small passenger vessels. The regulations in this subchapter have preemptive effect over State or local regulations in the same field.

§ 175.110 General applicability.
Link to an amendment published at 86 FR 73172, Dec. 27, 2021.
(a) Except as in paragraph (b) of this section, this subchapter applies to each vessel of less than 100 gross tons that carries 150 or less passengers, or has overnight accommodations for 49 or less passengers, and that -

(1) Carries more than six passengers, including at least one for hire;

(2) Is chartered with a crew provided or specified by the owner or the owner's representative and is carrying more than six passengers;

(3) Is chartered with no crew provided or specified by the owner or the owner's representative and is carrying more than 12 passengers; or

(4) If a submersible vessel, carries at least one passenger for hire; or

(5) Is a ferry carrying more than six passengers.



Middle of winter in Montana, would welcome spending time in the Caribbean again.

Godspeed

Thank you

[Montanan]

Good luck

USVI 6 pack school link:

http://captainschoolusvi.com/courses/oupv-6-pack.html


Certifications Required for Captains-


Operating 6 passenger boats in the USVI

-USCG OUPV Near Coastal License

-CPR & First Aid

-Random Drug Testing Program

-FCC Marine Radio Operator Permit

-TWIC Card (TSA.gov)


Operating 1-12 Passenger Boats in the BVI

-Add: Master Upgrade to 50 or 100 Gross Ton Master Near Coastal

-add: STCW Basic Training

-add: STCW Advanced Fire Fighting

-add: STCW Medical Care Provider

-add: STCW Proficency in Survival Craft (Limited)

-add: STCW II/3 Endorsement on License


Operating Vessels with more than 12 passengers in BVI

Same as above and

-add: STCW Crowd Managment

-add: STCW Crisis Management

-add: Vessel Security Officer