Two U.S. senators have introduced legislation that would allow businesses in direct support of commercial fishing to access a federal agriculture loan program.
Under The Fishing Industry Credit Enhancement Act, introduced by U.S. Senator Angus King (I-Maine) and U.S. Senator Lisa Murkowski (R-Alaska), businesses such as cold storage providers and gear suppliers would be allowed to use the Farm Credit System (FCS), a nationwide network of lenders and financial service providers. The program is currently used by farmers, ranchers, farmer-owned cooperatives and other agribusinesses, rural homebuyers, rural infrastructure providers, and commercial fishermen.
“These reliable loans are huge economic drivers for rural communities, helping businesses invest in new expansions, hire more workers, or modernize operations,” King said in a statement.
The FCS was established by the U.S. Congress in 1916 to provide a reliable source of credit and financial services to farmers. In 1971, the Farm Credit Act expanded the system to include commercial fishermen. As of the end of 2022, the program had provided nearly one million loans with a total value of USD 373.3 billion (EUR 348.4 billion). The FCS currently provides more than a third of the credit used by people living in rural America, according to the senators.
“The Fishing Industry Credit Enhancement Act is a straightforward, common-sense amendment to the Farm Credit Act of 1971 ensuring businesses that support Alaska’s fishing industry – our ranchers of the sea – have the same financing opportunities as businesses supporting our land-based farmers and ranchers,” Murkowski said.
The Farm Credit Council, a trade association representing the financial institutions participating in FCS, has backed the legislation.
“Supporting rural communities is a vital piece of Farm Credit’s mission, and this bill will provide more financing options for our rural fishing communities,” Farm Credit Council President and CEO Todd Van Hoose said. “Businesses providing services directly to the commercial fishing operators are also impacted by same the pressures as the U.S. domestic fishing industry. These fishing-related businesses need access to competitive financing to maintain service to the U.S. fishing industry."
The Maine Lobstermen’s Association has also voiced support for the bill.
“This change will increase the options for and availability of credit to businesses supporting the fishing industry in Maine and other coastal states,” MLA Executive Director Patrice McCarron said. “The economies of Maine’s coastal communities center around commercial fishing and the businesses that support the fishing industry in the same way that many rural communities revolve around farming and businesses supporting farming. Fishing-related businesses deserve the same access to competitive financing.”
FCS loans could prove crucial to small fishing businesses as banks begin to rein in lending.
The U.S. Federal Reserve’s decision to raise interest rates and economic uncertainty is driving banks to be more selective in providing financing, experts speaking at the Seafood Expo North America said in March 2023. Term B loans had already become harder to get, Jason Brantley, a senior vice president and senior relationship manager at Bank of America, said.
“2022 was one of the lowest years in more than a decade, and we’re well below that pace,” he said. “I think what’s happened in the bank market in the last week will probably continue to make it where there is not going to be a lot of folks wanting to go to that market and access capital.”
Still, banks will continue to make loans for less risky business.
“The pendulum has definitely swung from really aggressive lending and obviously cheaper lending rates, but banks are still eager to lend,” Brantly said.
Commercial fishing businesses looking for federal loan assistance today can utilize NOAA’s Fisheries Finance Program, which provides long-term fixed rate financing for refurbishing, modernizing, or purchasing fishing vessels, fishing facilities, or aquaculture facilities.