frequently asked questions

Typically, a lender will require a first priority mortgage over the asset to be financed, together with an assignment of insurances, a pledge of ownership interests in the limited company owning the asset and an agreement with the manager or operator. 

The beneficial owner is often expected to provide guarantee to support the obligations of the borrower under the financing facility, but additional security or collateral is unlikely to be required.  

The yacht and business aviation financing market is somewhat opaque and lenders tend to focus lending appetite on certain niches. That might be their home region, client profile, or the specifics of the asset itself. Researching and identifying potential lenders and exploring their appetite to provide support is feasible, but can be very time consuming and avail sub-optimal results. 

Atlantic Capital Advisory Limited has an extensive network of global lenders and significant experience of aligning financing needs with credit appetite while negotiating optimal terms with a sense of urgency, saving you time and expense. 

In addition, clear and concise presentation of transaction information, including financial information pertaining to the beneficial owner and/or guarantor is paramount. Incomplete or confusing information can lead to significant approval delays and potentially encourage a lender to abort a transaction altogether. Atlantic Capital Advisory has extensive experience of not only identifying the right lender and negotiating optimal terms, but also the coordination and facilitation of transactions through the credit approval and documentation processes to eventual closing.

This depends on a number of factors, primarily the current age of the asset, and the selected lender’s appetite for long-term commitments. Typically, loan facilities are agreed for a five-to-seven-year term, with a balloon repayment at maturity to affect a longer repayment profile of perhaps twelve to fifteen years.

Yes, this is generally possible, but will depend on the builder or OEM and the project location, the terms of the purchase agreement and the collateral offered by the builder or OEM. Not all lenders have appetite for construction risk, but Atlantic Capital Advisory Limited has considerable experience sourcing and arranging construction financing for both yachts and aircraft.

Yes. While a significant portion of the credit market in the private marine and aviation sector focuses on European and US residents, through its global lender network, Atlantic Capital Advisory Limited has the ability to secure competitive financing solutions for clients globally.

There are an array of lenders globally that offer financing for business jets and superyachts. These span private banks, commercial banks, leasing companies and non-bank or alternative lenders such as credit funds and family offices.

The first step is to identify the asset to be financed, or if the exact asset is yet to be identified, a refined idea of the type, age and value of asset if helpful.

Second, have a think about the intended use of the asset e.g. will it be purely for private use, or will it be chartered-out generating income that can contribute towards costs of ownership. Which management company will operate the asset, and where in the world is it likely to spend the majority of its time.

Business aviation and yacht financing invariably requires a commitment from the beneficial owner that the borrowing entity will have sufficient funds during the financing term to meet its repayment obligations. This takes the form of a personal guarantee, and lenders will expect to be presented with sufficient financial information to enable them to appreciate the value of such a guarantee as part of their credit underwriting. Preparation of concise guarantor financial information, including corroborated sources of income is a fundamental component of any credit application. A weak or incomplete submission could deter a potential lender, causing delays or even a lender to abort during the approval process.

The next step is to identify potential lenders and approach them. While some lenders can be identified with a simple web-based search, others are more discrete with their offering. Lenders across business aviation and yacht financing generally have a fairly narrow lending mandate. That is, they tend to focus on a narrow segment of the market which they consider a fit for their organisation, and that could be regional (e.g. owner location, asset use or registration location), asset type (e.g. size, age, OEM or marque), transaction value (lenders will have start and limit thresholds) or another qualifying attribute. 

Atlantic Capital Advisory has significant experience with lender credit processes, we work with owners and their representatives to prepare a robust application file and then navigate the approval process ensuring a successful outcome. We understand the lending mandates and focus areas of lenders within the business aviation and yacht credit segments, and ensure time is invested efficiently by engaging selected and relevant potential lenders from the outset.

There can be material differences in the terms available from one transaction to another, and also across different regions. Lenders typically structure terms to align with the perceived transaction risk, so higher LTV’s for younger assets with strong market demand, and potentially more attractive interest rates for clients able to present themselves as having a robust wealth base and high confidence in future income.

Lenders are open to financing both new and pre-owned assets. Generally, younger assets are in greater demand and therefore attract higher LTVs, and some lenders will be reluctant to finance assets beyond a certain vintage (e.g. out of production aircraft or yachts over 12 years old). 

New assets requiring pre-delivery payments are also eligible for financing during the construction stage. Not all lenders have pre-delivery appetite however, especially where yachts are concerned, and financing availability is often determined by the financial strength and pedigree of the builder, as well as the borrower/guarantor.

This will depend on several factors, including asset age and brand/marque, the financial strength of the borrower/guarantor and the global region concerned. Typically, aircraft can achieve LTVs of 60% – 80%, and yachts 50% – 70%, with the younger assets and regions with greater credit competition attracting the highest leverage.

Allowing your yacht or business jet to operate commercially and generate additional income when not otherwise in use optimises the economic efficiency of the asset, and  should reduce the net costs of ownership.

However, charter income is generally uncertain, and can be seasonal, especially where yachts are concerned. For this reason, while lenders often encourage commercial use, the credit markets generally exclude potential charter income in their affordability evaluation. It’s important that a borrower or guarantor is able to demonstrate sufficient income from alternate sources that would be available to service repayment obligations if needed.

There are a small number of lenders that focus specifically on the charter markets in both the business aviation and yacht sectors, but lending appetite is limited to specific regions.

Where charter income will be critical for servicing financing obligations, Atlantic Capital Advisory will guide on feasibility based on its extensive knowledge of the credit markets.

Lenders are typically comfortable with the popular yacht registration flags, including the UK, EU flags, USA, Cayman Islands, Marshall Islands, Bermuda, BVI etc. As the registration jurisdiction will govern a lender’s asset-based security, there is rationale for limiting the flag acceptance to registers with which the lender has been able to undertake legal due diligence.

Less common flags can be considered on a case-by-case basis.

Lenders are typically comfortable with the popular aircraft registers including the UK, European states, USA, Canada, UAE etc. As the registration jurisdiction will govern a lender’s asset-based security, there is rationale for limiting the acceptance to registers with which the lender has been able to undertake legal due diligence.

Less common registers can be considered on a case-by-case basis.

Lenders typically utilise an independent appraiser to derive a value using their knowledge of the specific asset specification, the market and relevant data points as well as comparative information. Often, lenders have a defined panel of appraisers with whom they have performed an assessment of credentials.

Some lenders require a physical survey of the asset, followed-by a valuation appraisal that takes the physical condition into consideration. Buyers often require the same, and to avoid cost duplication Atlantic Capital Advisory encourages both lender and buyer to share a surveyor and valuation appraisal. This must be co-ordinated upfront, so that both parties can approve the independent surveyor and/or appraised to be engaged.

Ideally, a high-level overview and specification of the asset to be financed, including historical maintenance records and previous survey reports in case a lender should request them.

Business aviation and yacht financing invariably requires a commitment from the beneficial owner that the borrowing entity will have sufficient funds during the financing term to meet its repayment obligations. This takes the form of a personal guarantee, and lenders will expect to be presented with sufficient financial information to enable them to appreciate the value of such a guarantee as part of their credit underwriting. Preparation of concise guarantor financial information, including corroborated sources of income is a fundamental component of any credit application. A weak or incomplete submission could deter a potential lender, causing delays or even a lender to abort during the approval process.

Atlantic Capital Advisory has significant experience with lender credit processes, we work with owners and their representatives to prepare a robust application file and then navigate the approval process ensuring a successful outcome. We understand the lending mandates and focus areas of lenders within the business aviation and yacht credit segments, and ensure time is invested efficiently by engaging selected and relevant potential lenders from the outset.