SBA Loans to Fishermen

A July 6 story says “flawed financial requirements” have made it difficult for squid fishermen to obtain “federal bailouts.” This conclusion is based on flawed facts and reasoning.

The U.S. Small Business Administration is offering economic injury disaster loans to fishing and fishing-related small businesses harmed by the effects of the 1997-98 El Nino. Calling loans which must be repaid “bailouts” is misguided.

SBA is approving these disaster loans to every eligible, viable business. But we must decline to make loans to businesses that can’t afford to pay a loan back. Many applicants simply don’t have enough earnings, according to their tax returns. Many report a history of losses. Some have excessive debt levels; one owner cited in your story has about $114,000 in annual debt. Some have unacceptable credit histories or have not repaid prior federal obligations or taxes.

Contrary to the story’s unsupported assertion that SBA has been making it “increasingly difficult to qualify for disaster loans,” we are applying the same standards in effect for years, including when we approved about $4.1 billion after the 1994 Northridge earthquake.

SBA has judged future repayment ability on the average of the past several years (which have been very good by historical standards), not just the record 1996-97 squid harvest. That is hardly underestimating the value of the state’s catch, as your story alleges.

ALFRED E. JUDD

Area Director

SBA, Sacramento