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Superyacht financing
No matter whether it is a challenging period or not, maintaining liquidity is of key importance even for wealthy people. Superyacht loans are perfect for acquisitions, construction finance, refinancing and also for equity release.
Many superyacht owners use financing solutions with their superyachts in order to maintain their cash-flow. They see it as optimization tool, as owners can facilitate an amount up to 90% of their yacht’s fair market value – meaning, depending on the client’s residence, between 40% to 65% net of any financial collateral, and for a maximum period of seven years.
The equity made available makes considerably large amounts that the owners can use for other purposes, instead of locking it with the asset.
To be honest, entrepreneurs like to use their capital to re-invest in higher yield projects, especially given favourable conditions today available on the market; optimized structuring may include
(i) part bullet payment,
(ii) annual capital repayment in arrears,
(iii) rates between 2.5% and 3% amongst other.
It is widely known that in general banks accept various motor and sailing yachts, but the process is never that simple.
A friend of mine, Olivier Milliex the owner of OMYS Monaco, who is highly specialised in these deals, shared with me the most important prerequisites to be eligible to yacht financing.
There are three key important indications, namely
1., the yacht’s value,
2., how she is managed,
3., and obviously the creditworthiness of the Beneficial Owner
Olivier told me that the most successful loans are those where the fair market value of the yacht exceeds the seven million euro mark, and she is operated by a recognised yacht management company.
It is also important to know that lenders typically prefer Red Ensign, Maltese, Luxembourg, French or Italian flags on the yachts.
In the Principality of Monaco the main indicative terms for a superyacht loan range between 5 million and 50 million euro, and the process take about 3 to 4 months until draw-down, depending on legal complexity.
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