The question facing shipping today is no longer whether capital is available, but what kind of capital is available, at what cost, and under which conditions.

As fleets age, regulations tighten, and fuel pathways remain uncertain, shipowners planning newbuilds or major retrofits find themselves navigating one of the most complex financing environments the industry has ever seen. Traditional bank lending is cautiously re-emerging. Alternative lenders are expanding their footprint. Leasing structures are evolving under geopolitical pressure. And green funds are growing in influence, but with strings firmly attached.

This third SFTC editorial brings clarity to a critical decision-making challenge: who will finance the next generation of ships, and how should owners and investors choose between competing capital sources?

Drawing together insights from Financial Strategies in a Volatile World and Developing Financial Tools to Sustain Support for the Green Transition, this article compares today’s major ship finance options and explains why capital strategy is now as important as fleet strategy.

The Return of Banks: Selective, Conditional, and Strategic

After more than a decade of retrenchment, conventional banks are showing signs of renewed interest in shipping. However, this is not a return to the pre-2008 era of broad-based sector exposure.

Banks today are lending with:

• Tighter sector limits
• Enhanced ESG screening
• Greater sensitivity to regulatory and reputational risk

Access to bank finance increasingly depends on quality rather than scale. Younger fleets, transparent governance, credible decarbonisation strategies, and strong charter coverage matter more than sheer tonnage.

For newbuild financing, banks typically prefer:

• Dual-fuel or transition-ready designs
• Clear compliance pathways aligned with IMO objectives
• Structures that allow for margin adjustments based on sustainability performance

In this sense, banks are not withdrawing from shipping, but reshaping the terms of engagement. Understanding these evolving expectations is essential, and it is precisely the kind of lender-side perspective explored at the SFTC Conference.

Alternative Lenders: Filling the Gaps Banks Leave Behind

Where banks step back, alternative lenders step in.

Private credit funds, family offices, hedge funds, and specialised maritime financiers now play a critical role in funding vessels that fall outside traditional bank appetite. This includes:

• Older assets with strong cash flow
• Niche or specialised vessel types
• Owners operating in higher-risk jurisdictions

Alternative capital is often faster and more flexible, but it comes at a price. Higher margins, tighter covenants, and stronger control rights are common.

Importantly, alternative lenders are not a homogenous group. Some are long-term partners with deep maritime expertise. Others are opportunistic, driven by yield rather than industry commitment.

For shipowners, the key is alignment. Capital that appears attractive at entry can become restrictive under stress if risk assumptions diverge. SFTC’s focus on alternative lenders asks the crucial question: has their time truly come, and for whom?

Leasing Structures: Evolution Under Pressure

Leasing has been one of the most transformative forces in ship finance over the past decade. Asset-heavy leasing structures enabled fleet expansion when banks withdrew, particularly through Asian leasing hubs.

However, this model is now under scrutiny.

Chinese leasing vehicles, once dominant, face challenges linked to:

• Geopolitical tensions
• Capital controls
• Sanctions exposure
• Greater domestic regulatory oversight

At the same time, leasing as a concept is not disappearing. Instead, it is evolving. New leasing structures are emerging with:

• Greater transparency
• More balanced risk-sharing
• Stronger alignment with ESG objectives

For shipowners, leasing remains attractive for capital efficiency and balance sheet management, but counterparty risk and jurisdictional exposure now require far closer examination.

The SFTC discussion around leasing is therefore not about decline, but about transformation.

Green Funds and Transition Finance: Capital With Conditions

One of the fastest-growing segments in ship finance is green and transition-focused capital.

Maritime decarbonisation funds, sustainability-linked loans, and blended finance structures are increasingly available to support:

• Alternative fuel newbuilds
• Energy efficiency retrofits
• Emissions-reduction technologies

However, green capital is not passive. It demands:

• Robust emissions data
• Clear use-of-proceeds frameworks
• Ongoing reporting and verification
• Alignment with recognised principles such as the Poseidon Principles

For many owners, the challenge is not willingness but capability. Accessing green finance requires internal systems, skilled teams, and a long-term commitment to transparency.

This raises an important distinction explored at SFTC: green finance versus transition finance. Not every asset can be zero-emission today, but many can demonstrate a credible pathway. Capital providers increasingly recognise this nuance, but only when it is clearly articulated.

Financing Newbuilds in an Era of Fuel Uncertainty

Newbuild financing sits at the intersection of all these capital sources and all the industry’s uncertainties.

Owners must make decisions today about vessels that will operate for decades, amid unresolved questions around:

• Dominant future fuels
• Carbon pricing mechanisms
• Regulatory enforcement timelines

Banks may favour conservative designs. Alternative lenders may accept higher risk at higher cost. Leasing structures may absorb asset risk but impose operational constraints. Green funds may support innovation but require proof of impact.

There is no universal solution. Instead, financing newbuilds has become an exercise in portfolio thinking, combining different capital sources to balance risk, flexibility, and cost.

SFTC provides a rare opportunity to hear how lenders and investors assess these trade-offs from their side of the table.

Risk Allocation Is the New Competitive Advantage

Perhaps the most important shift in ship finance is not who provides capital, but how risk is allocated.

Key questions now embedded in financing negotiations include:

• Who bears regulatory risk if rules change mid-loan?
• How is emissions underperformance treated financially?
• What happens if retrofit requirements accelerate?

Financiers are increasingly unwilling to absorb transition risk alone. Owners who can structure deals that share risk transparently are more likely to secure favourable terms.

This makes financial sophistication a competitive advantage. Understanding lender psychology, regulatory trajectories, and capital market expectations is now as important as technical fleet knowledge.

Why This Conversation Matters Now

The next generation of ships will define shipping’s economic and environmental performance for decades. The capital structures chosen today will determine:

• Resilience during downturns
• Flexibility under regulatory change
• Access to future refinancing

Choosing between banks, alternative lenders, leasing structures, and green funds is not a binary decision. It is a strategic one that demands insight, foresight, and dialogue.

Register for the SFTC Conference to hear directly from banks, alternative financiers, leasing specialists, and green capital providers as they explain how they assess risk, allocate capital, and support the next phase of shipping.

In a world where capital is more selective than ever, those who understand its logic will shape the future of the fleet.