Commissioning a new yacht – whether a semi-custom build from a production yard like Sunseeker or Princess, or a fully custom megayacht from a Dutch or German shipyard, is a journey that often takes several years. It also requires a unique funding structure, given that standard marine mortgages cannot be used because the asset (the boat) does not legally exist yet.
Silver Oak Capital specialises in pre-construction marine finance. We provide the liquidity to fund the shipyard stage payments during the build, ensuring your project stays on track until launch.
New-build yacht buyers often need pre-construction finance to cover the sizeable signing deposit and early design/procurement costs without locking up a large amount of cash for a long build period. It lets them secure a shipyard slot and specification while keeping liquidity available for other investments, property, or business commitments.
These buyers may want funding early so they can commit to a build slot, tailor the yacht for charter requirements, and start lining up management, marketing, and operational setup ahead of delivery. Pre-construction finance helps them bridge the gap between upfront contractual payments and the point where charter revenues can eventually support the ownership economics.
Pre-construction risk is highest because there isn’t a completed asset yet, so lenders focus on how recoverable the initial deposit is if the shipyard fails or the contract is terminated. A refund guarantee (often from a reputable bank/insurer) is a third-party promise to pay the refund for pre-delivery payments under the build contract (signing deposit and other early instalments) if the shipyard can’t or won’t. This materially reduces “loss given default” before the yacht exists as real collateral.
Lenders typically want the right to take control of the build contract if something goes wrong – this is done through assignment of key contract rights and/or step-in rights. Practically, it means the lender can continue the project, change yard (if possible), or enforce remedies while preserving the value of work-in-progress rather than being stuck as an unsecured creditor.
Because money is being advanced ahead of physical progress, facilities often have tight drawdown conditions and reporting requirements. Funds may only be released against verified invoices or purchase orders (e.g., long-lead equipment), supported by third-party confirmations, with clear permitted use of proceeds and regular progress updates to prevent cost leakage and ensure the financing remains aligned with the project timeline.
We help clients choose the right structure from day one – balancing the LTV, LTC, deposit levels, interest treatment, and covenants to match the build timeline and risk profile. This includes aligning the facility with the shipyard contract so funding is available exactly when payments fall due.
Some shipyards are reluctant to provide refund guarantees or accept lender interference. We have experience dealing with major European shipyards. We know how to structure the payment schedule to satisfy the lender’s risk requirements while keeping the shipyard happy.
Pre-construction finance is a temporary bridge. Once the boat is launched and the Protocol of Delivery is signed, the loan must be repaid. We seamlessly transition you from the construction loan into a standard Marine Mortgage or Marine Lease. This end-to-end service means you don’t have to re-apply for finance when the boat hits the water.
We run a targeted process across private banks, specialist marine lenders, and leasing houses to secure the best terms – not just the highest leverage. By creating competitive tension, we typically improve pricing, reduce friction on conditions, and speed up credit approval.
Typically, you (the buyer) will need to fund the first 20% to 30% of the build cost from your own resources. The lender then picks up the subsequent stage payments up to a maximum of roughly 70% of the contract price.
Construction delays are common. We structure the loan term with a “buffer period” to account for this. If the delay is significant, we negotiate with the lender to extend the facility, provided the shipyard can provide a valid reason and an updated delivery date.
Usually, no. Pre-construction finance is typically interest only. You service the monthly interest on the funds drawn, and the capital is either repaid or refinanced into a mortgage upon delivery of the vessel.