SBA 504 Loan Application Package

Harbor Marine Services LLC is a 12-year-old marine construction and repair company headquartered in Gloucester, Massachusetts. The business specializes in commercial vessel repair, custom boat building, and marine systems installation, serving the North Shore fishing fleet and recreational boating community. With 28 employees and $1.8 million in annual revenue, Harbor Marine has established itself as the leading marine services provider between Boston and Newburyport.

The company is seeking a total project financing of $750,000 through the SBA 504 program to acquire a 12,000 sq ft industrial waterfront property at 200 Wharf Road, Gloucester. The property will replace the company's current leased facility, eliminating $8,500/month in rent and providing purpose-built marine workshop space with a deep-water dock. The 504 structure allocates $300,000 (40%) to a CDC/SBA debenture at a fixed rate, $375,000 (50%) to a participating bank lender, and $75,000 (10%) from borrower equity injection.

Harbor Marine's financial position is strong: $1.8M annual revenue, $384,000 net operating income, DSCR of 1.85x, and $145,000 cash on hand. The property acquisition reduces occupancy costs by $42,000 annually while providing a hard asset that appreciates over time. Ownership projects the move will enable a 15% revenue increase within 18 months by adding capacity for larger vessel projects that the current facility cannot accommodate.

Harbor Marine Services was founded by Robert Tavares, a third-generation boat builder whose family has worked Gloucester's waterfront since the 1960s. After 18 years as a marine mechanic and project manager at Cape Ann Marine, Robert launched Harbor Marine to specialize in commercial fishing vessel maintenance and custom recreational builds. His brother Michael Tavares joined as operations partner in 2016, bringing 15 years of marine diesel and electrical systems expertise.

The 504 program is well suited for this project because the property is owner-occupied (Harbor Marine will use 100% of the facility), the fixed-rate CDC debenture locks in long-term costs, and the 10% equity injection requirement is lower than conventional financing. The property includes a 40-ton marine travel lift pad, which is critical infrastructure for hauling vessels and cannot be easily replicated at alternative sites.

Revenue has grown at 9% CAGR over three years. Net margin improvement from 17.6% to 20.9% reflects operational efficiency gains as the team has scaled. Post-acquisition, the elimination of $102,000/year in rent payments (replaced by approximately $60,000/year in combined mortgage payments) adds $42,000 in annual cash flow.

The global DSCR of 5.10x (post-acquisition, including rent savings) demonstrates exceptional debt service capacity. Even without counting the rent elimination as income, DSCR stands at 1.85x on current operations alone. The CDC requires minimum 1.15x; this project exceeds that threshold by a wide margin across all scenarios.

Robert Tavares, Owner/General Manager (70% ownership): 30 years in the marine industry. Started as an apprentice boat builder at age 16 in his uncle's yard. Spent 18 years at Cape Ann Marine rising to Project Manager overseeing $2M+ annual project volume. Holds ABYC Master Technician certification, USCG Captain's License (100-ton), and MA Construction Supervisor License. Board member of the Gloucester Fishermen's Wives Association and the Massachusetts Marine Trades Association.

Michael Tavares, Operations Partner (30% ownership): 20 years of marine diesel and electrical systems experience. Previously senior technician at Cummins Marine Northeast. Certified Cummins, Caterpillar, and Volvo Penta marine diesel technician. NMEA Advanced Marine Electronics Installer (MEI) certification. Manages the technical workforce and oversees quality control on all vessel systems projects.

The company employs 28 people: 12 skilled marine technicians (avg. 8 years tenure), 6 apprentice/helper positions, 3 project coordinators, 2 parts/inventory staff, 2 administrative, and 3 seasonal yard workers. Turnover rate is under 10%, well below the construction industry average of 21%.

Projections assume 10% revenue growth in Year 1 (from new capacity), then 10% in Years 2-3 as the larger vessel segment pipeline builds. Expense growth is capped at 5% annually. The property eliminates $102,000/year in rent and replaces it with approximately $49,200/year in mortgage payments, a net $52,800/year improvement to operating cash flow.

Harbor Marine Services directly supports Gloucester's commercial fishing fleet, the oldest and one of the largest in the United States. The company maintains vessels for 40+ fishing operations, contributing to the region's $53M annual fishing economy. The facility expansion will create 4 new full-time positions: 2 skilled marine technicians, 1 apprentice, and 1 project coordinator, increasing total employment to 32.

The project preserves waterfront industrial use in a community facing development pressure to convert marine properties to condominiums and restaurants. Harbor Marine's continued operation at Wharf Road maintains critical marine infrastructure that supports the broader fishing and boating economy of Cape Ann.