James Crew, Marine Sales Director, shares his thoughts about his role and gives his insights into how borrowing in the Marine sector works...
Tell us about your job
I like to think I’ve got the best job in the world - I get to talk about boats all day! But on a more serious note, Close Brothers Asset Finance is one of the few funders that have dedicated people in sales roles with no generalists in any of the sectors we serve.
All of us have significant experience in the sectors we specialise – my weekend passion is manning sailing boats.
My role is 95% external facing - either direct with clients or with the clients’ introducers. Whether I’m dealing one to one with a client buying a boat for personal leisure use, or the representative of a company looking fund a commercial vessel, makes very little difference to the conversations.
What’s your team’s background?
Close Brothers Aviation and Marine has been trading for 21 years but we are currently in growth mode and while which there is a fair amount of repeat business, it’s certainly not all that way. We rely on making good first impressions and following through on that promise.
Tell us about deal sizes and running costs…
We’ll start dealing with a loan value as low as £65k and in theory at least, there’s no ceiling. Our average lend for larger boats is £3 million – other funders will do a lend north of £100 million, that’s not our chosen territory.
Because of value we place on our customers, the deal size doesn’t necessarily make a big difference to how we treat the deal. Whether it’s £65,000 or £6.5m, we underwrite on the client’s ability to service the loans and handle the operating costs.
In terms of running costs, as a rule of thumb, very roughly 10% of the boat’s value is the annual running cost, so if the client’s usage plans suggest more wear and tear - and fuel cost - that may need spelling out to them.
Where are your customers typically based?
While the majority of our customers have their boats berthed in the UK, we are happy to support customers who wish to keep their vessels in warmer climes, including the Mediterranean.
Do the wealthy also borrow?
I’ve been working with boats for about 20 years and in my role I take a good share of the calls from boat salespeople. You used to hear brokers saying ‘my client is rich, they don’t need to borrow’, but often, in the end, they choose to borrow. This simplifies the underwriting element somewhat, and from the client’s point of view having the costs structured and spelled out gives a certain amount of peace of mind.
How does it all work?
For Close Brothers Aviation and Marine, the yacht is the primary security and is not backed up with a second charge on property, for example. If we lend to a company, we require a personal guarantee, which is often unsupported - we need confidence that the guarantee supports the overall facility.
Of course, marine finance is not all about leisure activity. We have an appetite for commercial vessels, usually UK-based. Crew transfer vessels, workboats, tugs, tourist boats and passenger ferries are all considered.
We also work closely with our panel lawyers and our panel valuers regarding the more complex transactions.
We find that, by and large, the clients have done their homework before they get in touch – we serve as the last link in the chain.
What does the future hold?
The commercial market is quite diverse - there is a real scramble for newer, bigger, more efficient boats and the future is all about efficiency. There are a number of hybrid boats coming now - sail and power. I’m absolutely convinced electric will take off - eventually.”
What sets Close Brothers Aviation and Marine apart?
There are several things that make us unique – one of them is that we are one of the few larger boat lenders that do not insist on taking assets under management. There are lots of private banks who will help fund the boat but you have to bring with you a sizeable value portfolio. We don’t require that. This aspect might not be a USP but it’s certainly a differentiator in the high-value market.
Our underwriting is solid. As ever, the trick is to walk the fine line between ‘commercial’ and ‘prudent’.