5 June 2025

Commercial marine finance explained

By Haven Knox-Johnston Commercial
Illustration of a cargo ship with three sails and containers on deck, floating on a teal wave-patterned background, highlighting the importance of sustainability in maritime transport.

Flexible payment options for marine
business growth

Commercial marine finance is used by marine businesses to fund and expand operations. It is often used if a commercial marine business is looking to acquire a new vessel or refinance existing vessels.  Funding is often crucial for smaller businesses as payments can be spread out over a period of time easing pressure on cash flow.

Lenders will often offer a range of flexible repayment schedules and loan terms to suit the needs of the individual commercial marine business and marine financing companies don’t need an existing banking relationship.  They also don’t need to take assets under their management.

Many options exist for commercial marine finance including marine mortgages, asset finance, build finance or refinancing.

  1. A marine mortgage is typically a loan secured against a marine craft such as a work boat or charter vessel. It is similar to a mortgage for a house and can be used to buy a new or a pre-owned vessel.
  2. Asset finance can encompass various financing options, including hire purchase. This type of financing can be used to finance a wide range of assets, including commercial marine vessels and marine equipment.
  3. Build Finance provides funding for the construction of a new vessel, offering the funds required for the building process.
  4. Refinancing of an existing loan can release capital for other purposes or it can be used to secure better terms.

Two people in orange overalls work on a boat, maintaining it as part of local marine trade policy regulations.

Other factors to consider include the maximum loan to value of the vessel and the maximum repayment term.  Interest rates can vary depending on the lender and the specific terms of the loan, so businesses looking for marine finance will be able to calculate the repayments while taking their cash flow into account.

Commercial marine finance providers will likely carry out checks to make sure that the financed vessel is suitably classed and/or coded for their intended operational use and registered in an agreed territory.

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For smaller businesses operating in the marine sector there is a variety of choice when it comes to marine finance providers.  A recently launched option is through BFS Marine Finance, which working with the British Business Bank has established a £20 million facility with the goal of enhancing financial access for smaller businesses in the commercial marine sector.[1]

BFS Marine Finance, a subsidiary of The Bibby Line Group, has a strong heritage in shipping and financial services and says it is keen to help the UK’s marine sector businesses grow and thrive.  The initiative aims to support the acquisition and refurbishment of marine assets and foster growth and sustainability in the industry.

 

The new facility will enable BFS Marine Finance to provide secured financing for a range of marine assets encompassing coastal ships trading in UK and European waters.  The qualifying assets are listed as being general-purpose workboats, windfarm service craft, survey vessels, charter boats and passenger ferries.

The financing is set to help smaller marine businesses acquire modern vessels to expand or upgrade their existing fleets.  This will in turn contribute towards improving energy efficiency across the industry, utilising advances in propulsion technologies as they come onstream such as hybrid, electric power or engines that can run on sustainable fuels.  The funding can also be used to upgrade vessels running on traditional diesel engines to battery or hybrid power.

Illustration of a large cargo ship with sails and a helipad, shown from an angled top-down view.

British Business Bank believes marine finance has a strong growth potential in the UK and the finance will help to unlock growth across the marine industry.

As Jonathan Marriott, Senior Director, Structured Financial Institutions Solutions, British Business Bank, points out: “Historically, the sector has had a high barrier to entry and a limited number of lenders servicing the market, so we hope this transaction will allow BFS Marine Finance to support more businesses and help drive availability and competition in the process.”[2]

The British Business Bank’s mission[3] is to drive sustainable growth and prosperity across the UK, and to enable the transition to a net zero economy, by improving access to finance for smaller businesses.

The Bank is confident the finance deal with BFS Marine Finance will help to unlock small commercial marine business growth.

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