Commercial fishing in the U.S. is a multi-billion dollar industry, and your business contributes to that success. But the fishing business is competitive, and a lack of funds can affect your ability to stay ahead. After all, keeping your company growing and afloat during slow seasons requires capital. Let’s look at reasons you might turn to a lender and some top financing options for your business.
Financing Your Commercial Fishing Business for Success
Here are just a few examples of times when the right commercial fishing loan could meet the needs of your fishing and boating business.
Update Your Fishing Boat
Is the latest seacraft calling your name? If so, financing can help you fund the purchase or lease of the type of boat your business needs, whether it’s a 35-foot commercial fishing catamaran or a 130-foot crabbing vessel.
Upgrade Machinery and Equipment
Commercial fishing is one of the most dangerous jobs in the U.S.; don’t let a machine malfunction put you at greater risk. Whether you need to repair or replace an expensive engine or motor, get the financing you need to operate. Invest in your fishing company and buy the parts your boat needs to run.
Expand Your Business
Maybe business is booming and you’re considering bringing on additional staff, relocating your headquarters or expanding your operations to another area. A commercial fishing loan could offer the amount of financing you need to ramp up your efforts.
Get a Boost in Working Capital
Working capital is money you need for everyday expenses, and it can be tough to come by in your cyclical business. If you’re waiting for invoices to be paid or didn’t bring in the catch you’d anticipated, get short-term funding to bridge the gap. Use a working capital loan to:
- Manage boat maintenance expenses
- Cover lease costs
- Pay utility bills
- Stock up on supplies
- Pay workers
- Fund emergency expenses
How Much Can My Business Qualify For?
Best Loans and Financing for Commercial Fishing Businesses
With so many financing options out there, it can be difficult to know which way to turn. Here are a few options to consider when you’re looking for commercial boat loans or fisherman financing.
The U.S. Small Business Administration (SBA) is a federal government agency that partners with lenders throughout the country to offer competitive loans to small businesses, including commercial fishing businesses.
SBA partner lenders are able to offer favorable loan terms because the SBA guarantees a portion of each loan, up to 85% in some cases. In fact, SBA loans are known for their low interest rates and extended repayment terms, which can be between 5 and 25 years, depending on the use of the loan. Funding amounts can even extend into the millions for some loans.
SBA loans include SBA Express, SBA 504, and SBA 7(a) loans, to name a few. It’s important to note that borrowers seeking SBA 7(a) funds for the building or reconditioning of fishing vessels with a 5-ton or more cargo capacity must first request funding from the U.S. Commerce Department’s National Marine Fisheries Service.
Leverage equipment financing to acquire essential machinery and tools, whether you need an expensive fish finder or costly GPS navigator. You can also use equipment financing to purchase or lease a boat. Many lenders offer equipment financing interest rates starting in the single digits. Shop around to find commercial boat loan rates that work for you, and use a commercial boat loan calculator to get an idea of what your financing will cost.
Keep in mind, with an equipment loan, the machinery you purchase serves as collateral for your loan. This means if you default on your loan, your lender can recoup their losses by seizing the equipment you acquired with your financing.
Lines of Credit
A business line of credit is a flexible funding solution that’s there when you need it. How does it work? A lender approves you for a certain credit limit, let’s say $20,000, over a certain term. You don’t have to use those funds right away. Instead, you can keep it tucked away until you need it.
If an emergency repair or other unexpected expense comes up, use your credit line to pay for the fix. You’ll only pay interest on the amount you borrow. Plus, as you pay down your debt, your credit line is replenished, up to your original credit line amount.
Business Term Loans
Business term loans are another option if you’re seeking financing. With a term loan, a lender will approve you for one lump sum of money, which can range from a few thousand dollars to several hundred thousand, depending on factors such as your revenue, existing debt and credit score.
Term loans can have repayment periods ranging from less than 18 months to 5+ years for longer-term term loans, depending on your lender. You’ll repay your loan with either daily, weekly or monthly installments, depending on your lender’s terms. Keep in mind, shorter-term loans generally have less stringent credit score requirements, but higher interest rates and more frequent repayment installments than longer-term loans.
Merchant Cash Advances
If your credit has seen better days, a merchant cash advance could provide a temporary solution to your funding needs. A merchant cash advance is a type of short-term financing many businesses qualify for. With this type of financing, a lender advances funds to you based on your business’s future sales. You’ll typically pay back your financing in daily installments until repayment is complete. Though this type of financing can be costly, it offers a quick, hassle-free solution when you need money fast.