The financial aspects pertaining to commercial activities of the marine industry are covered entirely under maritime finance. Some of these commercial activities include buying and purchasing of ships, development or repairing of gadgets and instrumentations, and even marine insurance and law payments.
Also, just like any other domain where external financial elements are involved, even marine finance requires the fulfillment of a few pre-set conditions.
And since the marine industry is highly volatile, it becomes imperative that these requirements are strictly met and not defaulted upon. Some of the conditions can be enumerated as follows:
- Strong credit worthiness
- Healthy reserves of cash or;
- any other strong back-up to indemnify against potential deprivations
There are a lot parties involved in the domain of maritime financing. Some of these parties are conventionally established in their method of operational activities while ship finance operators are unconventional yet established in their own singular way. This difference existing between the many available ship financers creates a wide array of feasibilities for the people requiring maritime financial aid.
A detailing of the many and varied marine finance operators can be listed as follows:
Banks & Other Lending Organisations
These are the conventional maritime financing service providers that exist. Banks as lending organisations take a detailed inventory about the firm approaching them for financial purposes. Only if they are satisfied with the company’s credit worthiness or only if the company has a long-standing association with them, then the banks invest in with the required funds.
As collateral, the receiver of the finance is required to mortgage the ship or pay an initial deposit as per the bank’s existing norms. The amount of initial deposit claimed by a bank is anywhere between 10 to 40%, while maritime financial assistance is provided for only about 60 to 80% of the intended commercial activity. The rate of interest is also variable depending on a bank’s association with the party intending to opt for marine financing.
Marine Money Lenders
Money-lenders too form a vital part in the domain of shipping financing. While money-lenders are not opted for by companies primarily for maritime financial assistance purposes, they nonetheless provide valuable assistance when aid from banks and other recognized financial organization is denied.
The most important and note-worthy aspect of loaning marine finance from money-lenders is that their repayment options are tricky and costly at the same time. Unlike banks which have a prescribed set of rules and stipulations, money-lenders do not fall under the ambit of these stipulations which could cause problems for parties opting for money-lenders as a lending option.
Just like investments in shares, in the marine sector there is the option of investing in a particular marine project. Some people interested in how to buy cc. Interested people invest their funds for the project to come to fruition with limited profits to their credit.
While capital investment is a good option in terms of maritime financing, it is equally risky as, if a project ends up failing, all the people with vested funds in the project end up losing their money completely.
Shipping financing is a necessary cog in the marine industry. It helps the marine industry to take risks and reach new heights, and also attract newer and newer business organizations to enter the fray.