Struggling Squid Fisherman Say Loan Program Has Been Disaster

It’s been an unbelievable year for the state’s squid fleet, most of which has remained tied to its moorings this season after warm El Nino waters drove the catch--and their profits--away.

And now, as those fishermen frantically scramble for ways to hold on to a way of life, many of them say the federal agency charged with helping them has made it increasingly difficult to qualify for disaster loans.

“This isn’t working the way it’s supposed to,” said Oxnard resident David Starbuck, a 40-year veteran of the seas whose boat, The Miss Julie, is due to be foreclosed on next month.

“It’s not working for anybody and now we’re out selling our cars and anything else that’s valuable just to pay a bill,” Starbuck said.

Since establishing the Economic Injury Disaster Loan program in April, the U.S. Small Business Administration has denied the low-interest loans to more than 73% of all fishermen who have applied, said Becky Brantley, a Washington D.C.-based loan officer who oversees the West Coast region.

She added that most of the fishermen were denied loans because they failed to prove that they could repay the money.

Those fishermen, many of whom could lose their boats and homes, say the SBA is relying on flawed accounting formulas that inflate costs and underestimate the value of the state’s catch, making it impossible for them or the industry as a whole to show a profit.

In the wake of what virtually all involved in the industry are calling an unprecedented disaster, squid fishermen from San Francisco to San Diego have been unable to troll the waters for the schooling mollusk because there are simply none to be found.

According to industry and government estimates, the squid harvest has plummeted from more than 257 million pounds caught over last year’s six-month season to almost nothing this year as warm coastal temperatures have driven the squid population to colder waters farther out to sea.

In December alone, only 2,515 pounds of market squid were netted off the California coast, compared to the nearly 45 million pounds caught during the same month in 1996.

In addition to keeping the 156-boat fleet idle, the barren seas have caused processing plants such as Suncoast Calamari in Oxnard to lay off workers until the squid population returns.

“What’s happened is truly incredible,” said Zeke Grader, executive director of the San Francisco-based Pacific Coast Federation of Commercial Fishermen’s Assns. “In every sense of the word, this is a disaster.”

Yet, Grader and many other fishermen said the federal government, and particularly the SBA, has yet to share that perception and begin giving the kind of assistance they say they will need to keep the most lucrative fishery alive.

Since following through on Gov. Pete Wilson’s request to lend a hand to the fleet in April, SBA loan officers have approved 33 low-interest loans totaling a little more than $1 million, Brantley said. An additional 89 applications were rejected.

The agency is expected to rule on 134 more applications within three weeks.

“Even though we are a liberal lending institution, we have to have a reasonable assurance that the loans will be repaid and unfortunately many of these fishermen couldn’t prove that after a review of their income taxes and credit histories,” Brantley said. “I understand why many of them are angry, but we’ve given them the benefit of the doubt.”

Fishermen counter that the formulas the SBA is using to assess the grave economic losses suffered this year and their ability to repay the loan are wrong, incorrectly presenting a fishery that doesn’t post a profit.

“They rode in here like they were going to be our white knights, but all they’ve done is stick us in the backs with their swords,” said Mike McLenaghan, a Seattle resident who fishes squid along the Ventura County coast and has had his application denied twice.

Neil Guglielmo, a long-time Ventura County squid fisherman, said the horror stories he’s heard have kept him from applying for a loan.

“Things are really tight right now, and to be honest with you, I’m not sure what I’m going to do,” he said. “But I’d almost rather spend my time trying to put together some money in another way than waste it with the SBA.”