How to get a loan for a commercial fishing boat

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Ask a Lender
August 23, 2017 | Updated September 26, 2017


Key Points

Financing a commercial fishing vessel

  • Understand the complex regulatory framework of commercial fishing.
  • Consider using the SBA 504 and 7(a) loan programs.
  • Consider local and regional banks.
  • Find regional organizations that offer financing.

Fishing for a living isn’t a business one simply leaps into. It takes licenses and permits that can be rather pricey. And while it is possible to commercial fish from land, most fishing businesses require a boat with special equipment.

Commercial fishing boats don’t come cheap, and unless you’re independently wealthy, you will probably need a loan to buy one. There are a variety of resources to help the men and women who operate commercial fishing businesses finance the purchase of a commercial fishing boat. Before you make the big purchase, however, be prepared for the complicated process of starting a licensed commercial fishing operation.

Before you start

Make sure you know what you’re getting into before you purchase a commercial fishing vessel. It’s not enough just to have a boat; to run a commercial fishing operation — a business where you catch fish or other seafood to sell for a profit — you must have the proper permits and licenses. Fishing charter businesses, where you rent space on a boat for fishing excursions, also require permits and licenses.

These permits can be difficult to come by, as many jurisdictions have limited the number of permits that may be issued to prevent overfishing. For example, Alaska’s commercial fishing regulators in the 1970s created a limited entry system to prevent the overharvest of salmon. Because of the limited number of permits created demand now far outweighs supply, causing the value of the permits to rise; some permits have sold for more than $100,000 apiece.

Commercial fishing businesses are prevalent along most U.S. coastal regions, as well as large waterbodies such as the Great Lakes, and riverways, including the Mississippi and Yukon-Kuskokwim rivers.

Fishing for financing

A bank is probably the first place you would think to seek financing for a commercial fishing boat. Local or regional banks in areas that have a large commercial fishing presence generally have programs specifically tailored toward the commercial fishing industry, including financing for fishing vessels.

In addition, financing may be available through the U.S. Small Business Administration (SBA). The SBA does not issue loans itself, but guarantees loans to encourage lenders to provide financing they may not have otherwise considered.

The SBA 504 loan program can be used to purchase a commercial fishing vessel. The program provides long-term financing at a fixed rate for purchasing real estate, machinery or equipment for expansion or modernization.

Financing for commercial fishing vessels is also available through the SBA 7(a) loan program. Borrowers seeking funds for the construction or reconditioning of vessels with a cargo capacity of 5 tons or more must first seek financing from the National Marine Fisheries Service, however.

NMFS is part of the National Oceanic and Atmospheric Administration (NOAA), which operates the Fisheries Finance Program. The program provides long-term financing for the cost of construction or reconstruction of fishing vessels.

The USDA’s Business and Industry Loan Guarantee Program also provides loans for the purchase of vessels.

Regional programs

A number of regional organizations offer financing for commercial fishing ventures, including for obtaining a vessel. Following is a list of some of them, although it is not exhaustive. Consider contacting economic development organizations in your area to see if there are local organizations with financing programs aimed at commercial fishing businesses.

Alaska Department of Commerce, Community & Economic Development. This department offers loan programs for commercial fishing. It offers long-term, low-interest loans, including loans for the purchase of a commercial fishing vessel. To qualify for loans through the department, you must have been an Alaska resident for the past two years; not owe past-due child support; and provide a copy of each applicant’s valid, government-issued identification at or before loan closing.

California Fisheries Fund. The California Fisheries Fund supports sustainable commercial fishing in California, Oregon and Washington, and offers loans for vessels, permits, equipment and working capital.

Farm Credit Network.The Farm Credit Network is a government-sponsored enterprise that was established under the Federal Farm Loan Act of 1916. The network’s member institutions are regulated by the Farm Credit Administration, an independent federal agency. The network of banks provides financing for a variety of rural business purposes, most of them related to agricultural businesses, including commercial fishing businesses. The organization finances equipment, facilities, inputs, real estate and land, processing equipment and livestock, including financing for commercial fishing vessels.

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