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Like many businesses, we routinely rely on bank support - 

 loans and credit lines - to finance plant improvements, and to 

 pay operating costs during the slow season. Although business is 

 tight, we have a perfect loan payment record with our banks, for 

 over ten years. 



But when we applied to our local bank for a loan in the fall 

 '93, to cover urgent plant repairs and for seasonal operating 

 capital, they said we needed a loan guarantee from the SBA. So 

 we applied for an SBA guarantee. And we were turned down. 



We reworked our application, and re-submitted it to the SBA. 

 And in February '94, the SBA turned us down again. In its denial 

 letter, the SBA said it was unable to approve us for the usual 

 business reasons: slim profits, unfavorable sales trends, 

 inadequate working capital. Because our loan collateral is our 

 waterfront ice plant - so-called "highly specialized" collateral 

 - it was considered inadequate to support our loan. 



The SBA told our banker (who had worked hard with us to 

 prepare our loan guarantee application) that because of pending 

 Federal government regulation of the commercial fishing industry, 

 it was concerned about: 



A) The immediate future of the local fishing industry; 



B) The future of businesses like ours which depended on the 



f i shing ; , and 



C) Anticipated declines in industrial waterfront real estate 



value because of declines in fishing. 



I cannot express how difficult a position this put us in, at 

 Cape Pond Ice, one year ago last February. We were on the verge 

 of shutting down, our employees out of work, and Gloucester 

 without a large ice plant. 



We did manage to survive last spring, as the boats struggled 

 with the implementation of Amendment V. At Cape Pond Ice Company 

 we tightened our belts, staff deferred pay and took temporary 

 lay-offs. The owners came up with a loan to meet payroll and pay 

 the power bill. Our bank deferred loan principal payments, and 

 also made a small new loan. 



