Having access to workable financial solutions is essential to all businesses. For marine business operators, being able to source the right commercial boat loans at the best interest rates and flexible terms can be critical to business growth and success. You need to have certainty moving forward that repayments will work with your cash flow projections. You want a loan structured with the flexibility to suit your individual business set-up. You want cheap interest rate finance that will deliver the projected ROI that you are expecting.

Loan Types


For boating and marine business operators there are a number of commercial finance products available for the purchase of boats.

The products vary in regard to:-

  • The tax deductibility of different elements of the loan.
  • Suited to either a cash accounting or an accruals method of accounting.
  • Treatment of GST: at what stage of the loan/purchase GST is applicable and claimable and on what elements of the loan.
  • Depreciation and balance sheet strategy: on or off balance sheet item.
  • Ownership/title of the vessel over the loan term.

The similarities across the loan products include:-

  • Fixed interest rates; fixed repayments; and fixed loan terms.

 

Chattel Mortgage Summary


  • The most commonly used finance product for both boats and other business assets.
  • Suited to cash accounting method.
  • Only the interest, not the entire monthly repayment, is tax deductible.
  • 100% of the GST on the boat purchase can claimed on the ensuing BAS. GST is not charged on the interest, it is charged on charges and fees.
  • Balloon is permitted.
  • Depreciation accounted at EOFY.

Marine Commercial Hire Purchase (CHP) Summary


  • The most commonly used finance product for both boats and other business assets.
  • Suited to cash accounting method.
  • Only the interest, not the entire monthly repayment, is tax deductible.
  • 100% of the GST on the boat purchase can claimed on the ensuing BAS. GST is not charged on the interest, it is charged on charges and fees.
  • Balloon is permitted.
  • Depreciation accounted at EOFY.
  • Difference from Chattel Mortgage lies in the ownership/title and the type of loan contract.

 

Boat Leasing Summary


  • An off-balance sheet finance type, suited to accruals accounting methods.
  • The monthly payments are tax deductible and treated as an operating expense.
  • GST applies to the monthly lease payments and residual
  • The boat appears on the balance sheet of the lender not the borrower.
  • Business operators should discuss with their accountant which product is best suited to their particular business.

Sourcing a Commercial Boat Loan


The cost of boats and other vessels for marine businesses can be significant and sourcing the most flexible and cheapest finance is critical. Using the services of a finance broker that specialises in marine finance offers significant benefits over arranging finance directly with say a bank.

The broker will handle the sometimes complex details and paperwork attached to commercial boat finance. They utilise their extensive and sometimes industry-only contacts to source the cheapest rates and negotiate the best terms that will work with your business.

We know finance brokers that specialise in commercial boat finance and can provide you with their details, on request. Contact us if you would like the contact.