Determining the validity of collateral

Discussion in 'Growing and Managing a Business' started by DirtyPanther, Oct 14, 2012.

  1. DirtyPanther

    DirtyPanther
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    Hello,

    I am glad that I have stumbled upon this forum as I have no where else to turn for advice. I am helping my father run a fishing company in Ghana; currently he owns two tuna vessels and wants to acquire an additional one but has no money for it. He wants me to apply for a loan in a bank to get around $1 million to $2 million and put up his current two vessels as a collateral. The problem is that he is not a U.S. citizen (I am though) and resides in Russia at the moment. He tried approaching different banks in Russia and some in Europe but none want to give him business credit because the location of his business is in Africa.

    Do you know if I will be able to secure a loan from a U.S. bank for around $1 million and put up his current two vessels as collateral? One vessel is stationed in Ghana and the other one is in France.

    I appreciate all of your feedback,

    DM
     
  2. GeekGhost

    GeekGhost
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    I'm not a banker but quite honestly I think you'll have a tough time securing that loan. With the US economy the way it is right now, banks aren't very eager to lend money. The loans that are being written up tend to be very, very safe. A loan of that amount with the collateral being overseas seems a little riskier for a US bank to grant at this time.

    Best of luck however. I hope it all works out for you guys.
     
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  3. Fergal

    Fergal
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    When banks give out a loan, their primary concern is that they will get paid the money back. With your father's business and assets being outside of the US, banks would find it more difficult to acquire the collateral in the event that the loan is not being paid back, hence they will feel that the loan is less secure.

    Would it be possible for your father to obtain a loan from an African bank?
     
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  4. DirtyPanther

    DirtyPanther
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    Thanks for your response. Yeah I figured the banks would be kind of stingy at this time
     
  5. DirtyPanther

    DirtyPanther
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    Thanks for your response. He just wants a loan from a bank in a western country; I guess he'll just have to work with what he has got for the time being.
     
  6. Business Attorney

    Business Attorney
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    There are lenders that specialize in making maritime loans. In my younger days (the late 1970's) I worked with a bank that made a lot of loans in that industry. That bank was merged into another bank and is no longer around, but there are are others who make those types of loans. Don't waste your time talking to a financial institution with no established presence in that industry.

    That reminds me of a legal term from those days. There are various types of charter party agreements in the maritime industry and one of them is known as a bare boat charter. But when you first hear the term "bare boat charter party," it is hard not to imagine a Bacchanalian celebration.
     
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  7. andrewmicky

    andrewmicky
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    I think you'll have a tough time securing that loan. With the US economy the way it is right now
     
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