It seems like a punch line these days. After all, the lending market as a whole is so unhealthy right now that even General Motors can’t sell to half of it’s customer base. As economies around the world continue to suffocate under the weight of an unprecedented macroeconomic cycle, those in the marine lending market are trying to put a good face on things. While it’s true that no old, wooden boat is eligible for financing by traditional marine lenders, many Classic Yacht readers are buyers of traditionally-styled vessels in fiberglass that are, under normal circumstances, eligible for bank financing with a 20% down payment.

A recent meeting of the National Marine Bankers Association in Palm Springs, California shed light on the state of the marine lending market and even cast a bit of optimism on the situation. “Boating has survived other crises”, MBNA president Jim Coburn noted, specifically President Carter ’s proposed ban on weekend boating in the 1970s. As fuel prices decline and interest rates for those with quality credit reach historic lows, Coburn believes healthy lenders will gain market share and develop new segments in recreational lending.

Even so, Wachovia Capital Markets equity strategist Gina Martin Adams painted a picture of a prolonged process of society’s digging itself out from under a pile of debt. “Household liabilities are now at an all-time high relative to both assets and net worth, and debt is about 125 percent of disposable income”. Adams believes a real recovery won’t come for 18 months or longer. Adams also offered that pleasure boat spending has decreased by 33 percent in this economic downturn.

Later in the conference a study by Michigan State University underscored the importance of attracting a new generation to boating and sailing. The study indicated that the lifetime value of one boat owner to the marine industry is over $130,000, excluding the money spent on marina expenses and accessories. Surveying consumers aged 55 and older, MSU found that the average boater has purchased more
than four boats in their lifetime. A new generation of four-boat owners will require access to lending capital for this to continue.

Lang Ryder, vice president of Seacoast Marine Finance’s marine lending division, says that boat loan applications are off by 40% from a year ago. As a result of this and other factors, “there’s plenty of money to lend”, he says. Ryder notes that as some financial institutions have left the marine business, others have moved in. “Loan applications for $2 million and up are down 25 to 30 percent”, Ryder says. Right now lending capacity exceeds demand as the minimum credit score required for a boat loan has risen from 640 to between 680 and 700 at most lenders.

“There are no more ‘stated income’ loans available; they’ve gone away”, says Ryder. “And you can’t get a loan with just your credit score alone.” The marine loan process in the United States has undergone changes too, part of the new electronic filing regulations enacted back in 2007 but now in full force. The United States Coast Guard has gone paperless, so all documents being shuffled between banks and the USCG are being scanned, increasing the likelihood of fraud and identity theft as these documents become more... portable. All told, the lending money is still available for those with proper credit, but be aware of nuances in the marine lending landscape.