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FishBiz Project

Financial and business tools for Alaska commercial seafood harvesters brought to you by the Alaska Sea Grant Marine Advisory Program

Financing Diversification

Photo credit Alaska Sea Grant.

Financing an expansion or diversification of a commercial fishing business can be complicated and your options for sources of financing may be much broader than when you first started fishing. If you are upgrading, you will also want to consider the tax implications of asset sales and acquisitions. In this section, you'll find links to a few tools that may be helpful as you take steps toward diversifying.

Consider carefully before making the decision to diversify. What makes sense for your neighbor's operation might be beyond the capabilities of your own. Costs of retooling might be too high, or the new fishery might make too great of demands on your time or fishing skills. Maybe the best way for you to generate additional income is outside the fisheries altogether, whether with an additional job or business, or other outside investments.

Loan Payment Calculator: A simple loan payment calculator can help you analyze the effects of different interest rates and payment schedules on your bottom line. We provide one on the "Vessels and Equipment" tab in the Proforma spreadsheet located on our "Will It Pencil Out" page.

You may look at some of the same sources of financing you used when first starting out your fishing business.  This loan comparison chart outlines some of those sources of financing.  Another unique option for commercial fishermen is to put fishing income aside for future vessel improvements through a Capital Construction Fund with the National Marine Fisheries Service.

"Like Kind Exchange": If you are selling your vessel to upgrade to a new one, you may be able to take advantage of a tax benefit triggered when you make this kind of transaction. Discussion of this strategy is in this document: 

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Trading Up, Saving Taxes HOT

Fishermen who have their heart set on a bigger boat or a different fishery can avoid substantial taxes by trading up instead of selling and buying. This bulletin explains how to defer capital gains taxes on the sale of an old vessel or permit by the exchange of "like-kind property" under Section 1031 of the federal tax code.

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