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Commercial Fisheries News
Volume 36 Number 4
December 2008
State, bankers try to aid Maine lobster industry
AUGUSTA, ME – Representatives of Maine’s leading financial institutions attended a Maine Department of Marine Resources (DMR) Lobster Advisory Council meeting on Oct. 27 to explain what the financial community is offering to do to help stabilize the current economic crisis pounding the lobster industry.
Ten days earlier, Gov. John Baldacci had directed the Department of Economic and Community Development, the DMR, and the Finance Authority of Maine (FAME) to meet with financial institutions and other government agencies to immediately examine the industry’s financial status and offer quick solutions to address both short- and long-term issues.
In response, the banking community held several brainstorming sessions, according to Charlie Emmons, FAME’s senior lending officer.
The first, which involved the banking community and DMR Deputy Commissioner David Etnier, produced a three-pronged approach.
“Promotion, processing, and short-term financing are the three areas we are staying focused on as we move forward,” Emmons told the lobster advisory council. “I am not here today to say we have a bunch of money or a financial plan in our back pockets, but right now there are a lot of parts in motion.”
Emmons went on to explain that FAME conferenced with representatives of 13 Maine-based banks currently holding loans issued to members of the lobster industry to explore how they may be able to help the industry navigate this financial crisis.
“The bankers were very positive about being flexible in helping the industry,” Emmons reported. “It is not a question of if the banks will help, but how they will help.”
FAME is typically a bridge-loan lender, financing short-term loans that bridge a financial gap in a business project. FAME also insures loans, but typically does not insure existing loans.
In an effort to bring short-term financial stability to the lobster industry, Emmons said FAME is prepared to insure pre-existing loans that have been “significantly changed” through loan restructuring.
A “significant change” was defined as a 20% drop in payment amounts. This 20% payment reduction could be accomplished by stretching loans out, reducing interest rates, making interest-only payments, or other means.
FAME can only work with business loans and cannot offer assistance with home or personal loans.
For individual lobstermen, the banks made clear the importance of staying current with debt in order to qualify for loan restructuring.
“The number one message tonight is that lobstermen need to keep their bank debt current so they can get help,” Emmons stressed.
Hugh Cowperthwaite of Coastal Enterprises Inc. (CEI) emphasized the importance of Emmon’s comment.
“Bankers want to work with fishermen on this,” he said. “If you are having trouble now, contact your bank now.”
Due to banking regulations, the Small Business Administration is unable to restructure loans once a loan becomes 29 days past due and FAME is unable to assist after a loan becomes 30 days past due.
“Once a loan becomes 90 days past due, banks are required to classify the loan as a nonperforming loan,” explained Emmons.
He further stressed, “This really impacts the bank negatively. There is a relationship here, a community, and the trickle-down impact could be large.”
Bankers urged lobstermen to stay in close contact with their lending institutions and said in the strongest terms that banks want to know when people are having a hard time making payments before loans become past due.
“Communication with the bank is one of the most important aspects of managing your loan,” Emmons said. “Lobstermen need to continue talking with their banks and maintaining those relationships.”
Gina LeDuc-Kuntz
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