Shipping finance has become a generic term referring to the financing of maritime projects, which encompasses not just shipping, but also other sub-sectors like ports, shipyards, and containers. However, in the following section financing of shipping projects is confined.

Shipping is a capital-intensive industry. Vessels constitute almost 90 percent of the fixed assets (net block and capital work in progress) of a typical shipping company. A LNG carrier costs around USD 250 million, a double-hulled VLCC costs around USD 90 million, a Handysized chemical ship is around USD 70 million. But ship values change up to 60 per cent in a few months. In such a scenario, a shipowner or a potential shipowner wishing to acquire a vessel finds a considerable gap in his personal funds availability and additional funds requirement.

Shipping finance has to a large extent remained a specialty sector on account of a number of unique characteristics associated with the shipping industry

 Lease is an Off-Balance Sheet financing option which increases capability to raise additional resources for expansion, diversification modernization

States and Markets, S.Strange, Cambridge Univerisity Press

Maritime Economics, M.Stopford,Routledge

Mezzanine financing provides companies the fuel to grow. Because the venture is on its second, third, or fourth round of financing, a wide array of financing options should be available. In some cases, the company does not plan ahead for future funding requirements and cuts off some potential sources of funding. If the company is over-leveraged at the onset, banks and bonds will be effectively excluded from the mezzanine rounds. If too much equity was given up at the formation of the company, there won't be a sufficient percentage of the company left to entice equity or venture capital investors at the mezzanine round.

To summarize, financing ships with debt and it is successful, the revenues remain to the shipowner after he pay off the debt. On the other hand, with equity capital he may grow larger or more quickly, but he will have to share the wealth and some control with investors. In the end, the best approach will be one that fits the owner and his company's needs, wants, and financial realities.

A joint venture is a business arrangement in which two or more parties undertake a specific economic activity together. It can turn under-utilized resources into profit, create a new profit center, help the company or an individual to enter untapped markets, quicker and at less cost than trying it alone. Joint ventures are a popular method of expanding business. Major corporations and mid-sized companies are getting together, and small companies can, too, on a less formal basis.

To finance ships, there are mainly two ways, which come from two markets. Equity and debt markets. Debt capital is generally cheaper than equity capital in the long run, and it's typically quicker and easier to find. Plus the real advantage to debt financing is that it doesn't dilute your ownership. The disadvantage of debt capital is that lenders require regular monthly payments of principal and interest regardless the companys' profitability.

Some common words found in the essay are:
Mezzanine Financing, INTRODUCTION Ships, Committee SDFC, Varun Shipping, Amro Citibank, Joint Ventures, Customer Lessee, Off-Balance Sheet, Credit Bank, Financial Institutions, financial institutions, mezzanine financing, public sector, sector banks, public sector banks, shipping companies, banks financial institutions, venture capital, private sector, equity capital, banks financial, shipping industry, non-banking financial institutions, development credit bank, bank debt equity,
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