Most buyers do not wire the full price from their own balance sheet. They mix debt, leases, equity, and sometimes export credit to match the vessel’s age, employment, and risk. The goal is simple: get the lowest all-in cost while keeping covenants and cash flow safe through cycles.
Explore real structures used to fund vessel purchases, compare terms side by side, and run quick numbers with the built-in calculator.
Senior Bank Loan
Amortizing loan secured by first mortgage on the vessel; often tied to employment and appraised value.
Sale & Leaseback
Sell vessel to lessor and lease it back; frees cash and shifts residual risk; purchase option at end is common.
Export Credit Agency (ECA)
Backed by ECAs when yard or equipment is from sponsor country; long tenors and stable pricing.
Chinese/Japanese Operating Lease
Popular for contemporary tonnage; efficient funding and flexible end-of-term options.
Mezzanine / PE
Subordinated debt or equity for higher leverage or story deals; pricier with covenants.
Seller’s Credit
Seller finances a slice of price; helpful bridge when banks cap LTV or timing is tight.
| Structure | Typical LTV | Tenor | Pricing Basis | Collateral | Good Fit |
|---|---|---|---|---|---|
| Senior Bank Loan | 60–75% | 3–7 yrs | SOFR + 2–5% | 1st preferred mortgage; assignment of earnings/insurances | Cash-flowing vessels with charters; established owners |
| Sale & Leaseback | Up to ~85% | 5–10 yrs | Fixed or floating rent | Title with lessor; purchase option common | Cash release; fleet renewal; tax efficiency |
| ECA-Backed Loan | 70–80% eligible | 7–12 yrs | OECD/ECA terms | Covered by ECA guarantee | Newbuilds/refits with qualifying content |
| Operating Lease (Asia) | High leverage | 5–10 yrs | Rent indexed to base rate | Title with lessor; covenants lighter than banks | Modern tonnage, scale buyers |
| Mezzanine / PE | N/A | Flexible | High coupon or equity | Junior to banks | Growth, story deals, bridging |
| Seller’s Credit | 10–20% slice | 1–3 yrs | Fixed margin | Back-rank or unsecured | Tight timelines; LTV gaps |
Quick Loan & DSCR Calculator
Estimate payment, balloon, LTV, and DSCR. Values are illustrative only.
From Term Sheet to Drawdown
- Term sheet agreed with lender or lessor; covenant heads and security package outlined.
- Due diligence: technical inspection, valuation, KYC, sanctions screens, insurance quotes.
- Definitive docs: mortgage, assignment of earnings/insurances, account pledges, guarantees.
- Conditions precedent: class status, no liens, certificates, MOA, charter party assignments.
- Funding and delivery: mortgage stamped; title and risk pass; insurances in place.
- Post-draw monitoring: covenants, reporting, valuations, drydock reserves if required.
Financial & Legal
- 3-year financials; group structure chart
- Sanctions and PEP screenings
- MOA, charter party, addenda
- Bank mandates and account pledges
Vessel & Technical
- Class and statutory certificates
- Recent condition survey; off-hire reports
- Dry-dock and capex plan
- Insurance slips and warranties
Security Package
- 1st preferred mortgage
- Assignment of earnings and insurances
- Share pledges or corporate guarantees
- Minimum liquidity and value covenants
Quick FAQs
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Can I combine structures?
Disclaimer: Informational only. Not financial advice. Terms vary by lender, flag, age, and market conditions.
Financing should match the vessel’s employment and your risk tolerance, not just headline pricing. Run the calculator with conservative EBITDA and stress the rate. If the numbers still work with a value or charter wobble, you’re in a safer lane.
