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26 MN March 2011 And that’s where the good news comes in. • Take some time today to plan for tomorrow. Look around for a small company in your desired market and make a deal to buy it. Maybe you’ll find one in financial distress. Buy it cheap and turn it around. Maybe you can find an owner looking to retire, make a deal to build sweat equity. Maybe rent a boat, hit the spot market or get a contract or two and demonstrate that you can pay your bills. I had a client a couple of years ago who had a long term bareboat charter agreement with a shipowner. The month- ly rent for the vessel was really stiff. My client wanted to build a new boat and needed financing. He didn’t have a lot of cash to put down, nor did he have other vessels to cross-collateralize the loan ... but he did have a strong financial statement after three years of renting and operat- ing the chartered boat. We were able to find financing eas- ily by demonstrating that the cost for a new boat would be considerably less than the rent he was paying. And a new boat, with a lower monthly cost, would make him into an even better credit. • Over the next three years, invest in and build your business to be profitable. Build your revenues to be at least two to three times higher than your anticipated debt. Don’t saddle yourself with loans or high overhead. Defer distributions until you really are profitable. Forget the Caddy and the Rolex, they come later. • Finally, secure a long term, “Hell or Highwater,” “Take or Pay” charter with a major company (i.e. an oil company, utility, etc.) or other financially sound charter- er. Your charterer’s credit quality will be the underlying credit in the transaction and your lender can “back to back” the loan or lease terms with the charter. Remember, banks only want to loan money to those few who don't need it. Make yourself one of the few. Richard J. Paine, Sr. is the President of Marine- Finance.Com, a maritime consulting firm specializing in the financing and leasing of commercial marine vessels and other equipment. He can be reached at rpaine@marine- finance.com or 516-431-9285. FINANCE
