View non-flash version
Marine Finance Effectively Assessing Your Risks by Bonnie Gershon, vice president and manager. Maritime and Surface Transportation, Summit Bank One of the greatest challenges facing a lender in the maritime industry is appro- priate assessment of risk. In this excit- ing, varied and vibrant industry, a lender's effective risk assessment requires a thorough understanding of the vagaries that characterize the industry. Many of the companies have been in business for 100 years or more. They have a long family history associated with the sea that has charted their eco- nomic destiny for decades. Experience and expertise are the key factors in designing a successful strate- gy to serve the maritime market, which is made up of skilled professionals who know their business from A to Z. Vessel owners also are proud of their company history. For instance, they jump at the chance to show off models of their ves- sels, current units and those that have achieved the status of razor blades. Many are named after beloved family members and reflect a company's her- itage - specifically how it has grown and continued to operate over the years. Through relationship building and per- sonal attention to our maritime clients, Summit Bank has learned of family and business disputes, failures and natural disasters. This is an industry where the perils are quite real and the emphasis on safety is a universal theme. In fact, a good safety record is a vital factor of which some members of the industry are justifiably proud. Listening to weather conditions signifies much more than planning a summer vacation, because hurricanes and storms can have an inti- mate impact. For this industry, the weather too often becomes an issue of crisis management — rescue at sea, a sinking vessel, pumping sand back onto the beach. Nevertheless, in the maritime industry we often hear of good growth ideas that require financing. Part of risk assess- ment is deciding whether a particular financing opportunity represents a "bankable" risk. Bankable relationships with a customer often last for many years and are rewarding for both parties. A good banking relationship includes many dimensions that can span several life stages of either the business or the people involved in running the business. A good banker seeks to understand the long-term strategy and the financial needs of a customer in order to structure the appropriate financial growth plan. Such a plan may also involve acquisi- tions and mergers, estate planning, and succession issues for management. Reach Higher Summit Some financing opportunities may represent a huge upside potential involv- ing the fulfillment of lifelong dreams and aspirations. However, high reward potential comes with an inherently large downside risk. Such opportunities are coined "unbankable" by traditional bank debt vehicles such as lines of credit, revolvers and term loans. Traditional bank products may earn interest and fees, but they are not structured to com- Save up to 40% on Inmarsat-A services from Stratos Stratos is proud to introduce its NEW Inmarsat-A earth stations with unbelievable voice clarity and data speeds of 19.2 kbps +. Sign up with Stratos today, and take advantage of these significant savings (additional volume discounts may apply). This introductory offer is available for a limited time only. Ship-to-Shore Airtime Services Call Now: +1-709-748-4233 You can also register by dialing LES ID 013-1 (octal) or LES ID 011-1 (decimal), and then dial 31 # from your Inmarsat-A terminal, or call Stratos: Toll Free (North America): Worldwide: Fax: E-mail: 1 888 766 1313 + 1 709 748 4233 + 1 709 748 4305 info@stratos.ca www. stratos. c a 14 Circle 275 on Reader Service Card Maritime Reporter/Engineering News
