House Panel Investigates Why Fishermen’s Loan Program Foundered

A congressional oversight committee is demanding to know why federal disaster loans have been denied to a vast majority of commercial fishermen, but Ventura County anglers remain skeptical and say that any relief may be too little too late.

“I’d say it’s kind of encouraging, but we needed this money months ago,” said Oxnard resident Dave Starbuck, whose loan application was denied in early June. “It’s getting to a point where any money they give us isn’t going to matter at all. . . . Either we’ll all be bankrupt or the squid will be back and we’ll have that money we needed back in February.”

Prompted by complaints from fishermen and an inquiry by The Times, the House Committee on Small Business asked the Small Business Administration on Friday to explain why it denied more than 72% of the 122 applicants who have applied for assistance since April.

“It’s unusual when three-quarters of the industry is declined disaster assistance,” said committee counsel Charles Rowe. “Hopefully, we’ll be able to find out why that’s the case and, if there’s a problem, rectify it.”

Chaired by Rep. James Talent (R-Mo.), the committee oversees the SBA and other federal lending institutions and programs. Although it cannot force officials to make loans, the committee can draft new lending policies and its members can pressure the agency to change its lending practices.

In what many involved in the industry have called an unprecedented disaster, the state’s 156-boat squid fleet has remained idle for almost a year after warm El Nino waters drove the schooling mollusks to colder waters farther out to sea.

The barren seas have caused most boats to remain bound to their moorings while their owners scramble to scrape together enough money to save their homes and keep creditors at bay.

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 virtually nothing this year.

In December alone, just 2,515 pounds of market squid were netted off the California coast, compared with the nearly 45 million pounds caught the previous December.

To help fishermen and the industry ride out the season, the SBA made Economic Injury Disaster Loans available to qualified fishermen in April.

But for most, the glimmer of hope that those loans provided has also gone the way of the squid as angler after angler has been declined because they could not demonstrate an ability to repay the loan.

And those fishermen, many of whom are perilously close to losing their homes and boats, say SBA loan officers are using flawed accounting formulas that inflate costs and underestimate the value of the harvest, making it impossible for them and the industry as a whole to show a profit.

SBA officials, however, said recently that while they sympathize with the squid fishermen, they cannot grant loans to people who can’t meet their criteria.

An SBA official in Sacramento said he could not comment on the committee’s request because he had no information on it.

While a congressional inquiry is a welcome development for fishermen, most remain skeptical as to whether their requests for relief will ever be granted.

“This entire process is completely insane,” said Mike McLenaghan, a Seattle-based fisherman who trolls for squid off the Ventura County coast. “It’s just one thing after another with these guys. . . . I’m on my ninth loan officer and nobody seems to understand how this business works and as long as that happens nobody’s going to get any help.”

Starbuck, the Oxnard fisherman, said that even if the SBA did come through with its disaster loans it might be too little too late.

“We needed that money months ago and I’m not sure how much it’s going to help now,” he said. “The next season’s just a couple of months off and the only thing a loan will do for me now is put me in even deeper debt.”

Although committee officials have not received any answers from the SBA, committee counsel Rowe said loan officers may be declining requests because they are unfamiliar with the industry and this is the first time such loans have been made available to fishermen.

“[The SBA] does great work with earthquakes and floods, but this is a fairly new area for them and we feel this problem might be a result of a lack of understanding,” he said. “Fishing is a unique and complicated business, so it wouldn’t be a surprise if that’s been a factor.”