Sea Farm Loan: Financing for Maine’s Marine Aquaculturists

IF YOU ARE SEEKING TO GROW YOUR AQUACULTURE OPERATION BUT HAVE HAD DIFFICULTY GETTING A LOAN FROM A COMMERCIAL LENDER, CEI IS HERE TO HELP.

CEI is pleased to offer a loan product created to assist Maine aquaculturists.  The purpose of this loan is to provide financing to individuals looking to expand their aquaculture venture but have not been able to access to conventional sources of capital.

Purposes of Loans: 

Term loans will be made to growers for restructuring of debt, purchasing boats, gear, and equipment, renovating or constructing infrastructure, acquiring land, and supplying operating capital.

Loan Amount:  

Loan requests are expected to be under $150,000.

Criteria for Application:

  • Aquaculturists raising shellfish and/or sea vegetables
  • Borrower must operate within Maine’s coastal counties: York, Cumberland, Sagadahoc, Lincoln, Knox, Waldo, Hancock and Washington.
  • Borrower must have necessary licensing and leasing permits
  • Borrower must have documented $500 in sales to unrelated/non-family party
  • Complete business plan and minimum two years cash flow projection
  • Evidence of declination of financing from other commercial sources

Terms: 

Up to 10 years, with flexible payments considered

Interest Rate:     

CEI lends at competitive rates

Collateral:          

CEI seeks collateral equivalent to the full amount of the loan and requires personal guarantee of the borrower.

Costs:                  

Origination fee of 2% of the loan and other filing fees are payable at closing.

Details:

  • We consider loan applications from all Maine coastal counties and fisheries subsectors including for profit, nonprofit, startup businesses, municipalities, business expansions, individuals, co-op’s and LLC’s.
  • Most CEI loan terms are tied to the useful life of the asset being financed or 10 years. Permanent working capital loans should not exceed five years. Most real estate loans will carry a term of 7-10 years but are likely to have an amortization schedule for up to twenty years with a balloon payment due. It is generally understood that the loan term should not exceed the term of the funding source.
  • Loan repayment:  Most CEI loans are repaid in equal monthly installments. The schedule of loan repayment is stipulated in each loan agreement and/or promissory note. Typically, loan payments may be structured to meet a borrower’s particular cash flow needs and may feature interest only with a deferred principal payment, seasonal repayments, interest only, or a balloon payment. Repayment structure is determined in the underwriting process and is generally tied to the use of funds.
  • Credit not Otherwise Available Requirement: Funds cannot be used to substitute for available private capital and potential borrowers must demonstrate that credit is not otherwise available.  This would typically be in the form of a bank “turn-down” letter or letter indicating that the bank can only finance a portion of the money the borrower needs. When a borrower signs a commitment letter, the borrower attests that they are unable to secure comparable rates and terms from a conventional lender.
  • Prepayment Penalty – 0 for payout, progressive for refinance with another institutional lender, 5% of outstanding balance of First Year (Scale) The Borrower is subject to the following prepayment penalty should they refinance with another financial institution or non-traditional lender: 5% (1st year); 4% (2nd year); 3% (3rd year); 2% (4th year); 1% (5th year) applied to the outstanding balance.

Should an applicant require assistance in preparing any information, business counseling services are available at no cost from CEI’s Small Business Development Center (SBDC), or from any of the other SBDCs located around the State of Maine.