Bankrolling Boats: Financing options for a variety of vessels.

• Author: Barbour, Tracy
• Position: FINANCE

Whittier-based Phillips Cruises and Tours recently finished a two-year project to transform a former New York passenger ferry into a tourism excursion vessel for Alaska. The ferry had a complete retrofit: mechanics and electronics were replaced; new seating and tables were installed; and the interior cabin was opened up to give every seat a clear line of sight outside.

The Bravest--named after a New York Fire Department involved in a 9/11 rescue--made its long-awaited Alaska debut this spring. "The vessel we currently use for the 26 Glacier Cruise [the Klondike Express] has a capacity of 338 passengers, and this vessel will add another 288 seats," says Bob Neumann, owner of Phillips Cruises and Tours. "So there will be less crowding at peak season. The biggest benefit is that we now have a backup vessel in case of engine failure or other issues with the Klondike Express."

To facilitate revamping the Bravest. Neumann borrowed $7 million from First National Bank Alaska with a fixed interest rate of less than 5 percent and a twelve-year term. Half of those funds were used to pay off a higher-interestrate loan from another institution, leaving $3.5 million for the retrofit. "Much of the project was done in house, where we used our own funds," Neumann says.

Working with First National was "fantastic," says Neumann, who has been in the Alaska tourism business since 1985. "They gave me so much leeway," he explains. "They were not on my back asking for progress reports. Right off the bat, we had a trusting relationship, and I really appreciate that."

He adds: "It's the first time that I had a bank that actually worked with me and sees the value in the business I am running... They're one of the few local banks that is left, and they understand my history and I understand theirs. It's been so nice to have a bank on my side." Marine vessels like the Bravest are the mechanical backbone of some of the state's key industries: tourism, fishing, and transportation. Alaska's financial institutions have a variety of options to help business owners purchase new or used vessels to support their operations.

Financing for a Variety of Vessels

First National offers financing for a wide range of commercial watercraft, from private yachts for hire, tugs, and tour/charter boats to fishing vessels like gillnetters, long liners, and tenders. "We can find a way to finance just about any type of commercial marine vessel," says Zac Hays, vice president and commercial lending unit manager at First National.

At Wells Fargo, there are loan programs available for almost any vessel imaginable, according to Senior Vice President and Alaska Commercial Banking Manager Sam Mazzeo. In Alaska, the bank provides marine vessel financing for everything from commercial fishing boats and barges to various tourism-related vessels. "We do more of this...