Types of Finance Available for Fishing Vessels
Hire Purchase (HP)
Hire purchase is the most common structure for commercial fishing vessel finance. The lender purchases the vessel and hires it to you over an agreed term. Title passes to you on payment of the final instalment. The vessel appears on your balance sheet from day one, and you can claim capital allowances. HP is available from virtually all commercial fishing vessel lenders.
Finance Lease
Under a finance lease, the lender (or a funding company) owns the vessel for the life of the lease. You use the vessel commercially and make regular lease payments. At the end of the lease, you may have the option to continue leasing at a nominal rent, or the lender sells the vessel and shares the sale proceeds with you. Finance lease can have tax and balance sheet advantages depending on your business structure - always take specialist accountancy advice.
Secured Business Loan
Some lenders (particularly clearing banks and Shawbrook) structure fishing vessel finance as a secured business loan rather than HP or lease. The loan is made to your business and the vessel is charged as security (similar to a mortgage). You own the vessel from day one. This structure is often preferred by businesses that already bank with the lender and want a clean, straightforward loan facility.
Government-Backed Finance
The British Business Bank (BBB) administers several government-backed schemes that can be accessed alongside commercial fishing vessel finance. The Recovery Loan Scheme (RLS) and similar programmes are not vessel-specific, but some fishing vessel operators have used them to fund deposits or working capital alongside a main vessel finance facility. The UK Seafood Fund (see our dedicated guide) provides DEFRA grants that can be stacked with commercial finance for qualifying vessels and equipment.
What Lenders Look For
MCA Coding
The Maritime and Coastguard Agency (MCA) certificate confirms the vessel is safe for its intended commercial operation. All mainstream lenders require a current certificate. The coding determines the area of operation (Category 0–6) and the minimum safety equipment required. Lenders use the coding to assess the vessel's operating profile and any restrictions on where and how it can fish.
Vessel Condition
An independent condition survey from an IIMS or YDSA-accredited marine surveyor is required by most lenders for transactions over £50,000–£100,000. The survey confirms the vessel's structural integrity, machinery condition, safety equipment status and market value. A vessel with a poor survey report - significant structural defects, machinery in poor condition, or significant deferred maintenance - will either be declined or attract a lower LTV.
Trading History
Most lenders require 2 years of filed accounts demonstrating that the fishing business generates sufficient income to service the loan. Lenders calculate a debt service coverage ratio (DSCR) - typically requiring net income to exceed loan repayments by at least 1.25x. Seasonal income patterns are taken into account by experienced fishing vessel lenders, but the annual totals must support the debt.
Fishing Licence
A current fishing licence is required for all commercial fishing vessel finance. The licence confirms the business's right to fish commercially and underpins the vessel's revenue-generating capacity. The quota allocation attached to the licence is also noted - a business with substantial FQA quota has a more secure income stream than one fishing on a day-to-day basis without quota.
Step-by-Step Process
- 1Initial enquiry to Doulton Bridging Finance - tell us about the vessel, the amount required, your business and trading history. We assess your situation and identify the 2–3 most appropriate lenders.
- 2Document gathering - we provide a clear list of required documents: 2 years' accounts, management accounts, vessel details, fishing licence, MCA certificate, director information.
- 3Marine survey - we can recommend accredited surveyors. The survey report goes to the lender alongside the application.
- 4Application submission - we prepare and submit the application pack to the selected lender(s), presenting your case clearly and professionally.
- 5Credit decision - timescales vary from 48 hours (specialist lenders) to 4–6 weeks (clearing banks). We manage the lender relationship throughout.
- 6Offer and legal documentation - once credit is approved, the lender issues a formal offer. Legal documentation is signed and returned.
- 7Completion - funds are released, typically to the vendor directly. You take possession of the vessel.
Worked Example: £350,000 Trawler Purchase
| Parameter | Detail |
|---|---|
| Vessel | 18m steel-hulled otter trawler, 2017 build, MCA Category 2 coded |
| Purchase price | £350,000 |
| Finance amount (80% LTV) | £280,000 |
| Deposit | £70,000 (20%) |
| Lender selected | Close Brothers Asset Finance |
| Finance type | Hire Purchase |
| Rate | 8.5% fixed |
| Term | 7 years (84 months) |
| Monthly repayment | approximately £4,390 |
| Total repayable | approximately £368,760 |
| Total interest cost | approximately £88,760 |
This example shows a realistic mid-market transaction. The operator is a well-established Ltd company with 6 years' accounts and a clean fishing licence with demersal quota. Close Brothers was selected over Shawbrook (higher rate, lower LTV) and NatWest (below their £500k minimum). The monthly repayment of £4,390 represents approximately 18% of the business's average monthly turnover - comfortably within the DSCR requirements.
If the same operator had qualified for a clearing bank rate of 6.5% over 10 years, the monthly repayment would have been approximately £3,160 - saving £1,230/month. The additional paperwork and relationship investment required to access NatWest or HSBC becomes worthwhile at higher ticket sizes. At £350k, Close Brothers is often the optimal balance of rate, process speed and certainty.