SOUTHWEST HARBOR – Morris Yacht Inc. has been approved for a $1.2 million guaranteed loan through the U.S. Department of Agriculture Rural Development Program.
The federal guarantee will allow the company to consolidate existing debt as it prepares for future expansion, according to company controller Tuesdi Woodworth. The loan will help refinance the operation in Trenton.
“We’re looking at consolidating and fixing the rate for the long term,” Woodworth said Tuesday. “We’re definitely looking at some expansion, and the government guarantee is one piece of that.”
Started in 1972, the company’s operations have been expanded in recent years to include boat building, service, storage, brokerage and charting. The company now employs 106 people. Earlier this year, the company received the domestic Boat of the Year award from Cruising World magazine and was named as a new Pine Tree Development Zone.
That designation will push forward a planned $1 million expansion that will add as much as 25,000 square feet of production space to the plant in Trenton and create as many as 20 new jobs at that facility. Work on the expansion project is expected to begin this summer.
The federal loan guarantee is not linked to the expansion and will affect only existing debt, Woodworth said.
One of the benefits of the federal guarantee is that it enables a borrower to obtain a lower, long-term fixed rate of interest, according to Dave Eldridge, the vice president of commercial banking at Machias Savings Bank, which has handled Morris Yacht’s financing. Typical commercial loans offer fixed rates for a relatively short time, generally from three to five years, he said.
The guarantee is really granted to the bank, Eldridge said, and typically covers about 80 percent of the total amount financed. The bank can market that amount to a pool of potential investors. Because of the federal backing, there is no risk attached to such an investment, and investors can accept a lower interest rate over a longer time period.