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52MNNovember 2011they faced was the initial start-up loan. ?As a smaller company,? Rachel said, ?we can?t go to specialized lend- ing markets, the ones that traditional- ly lend to shipping and tugboat com-panies. They like to do larger loans. So we have to look at mid-size to smaller banks that do real-estate, restaurant start-ups, that kind of thing.?But those banks don?t know much about shipping, Rachel said, and?while they find it very interesting and different from their normal loan portfolio, they always have trepida- tion about dealing with somethingthat?s outside of their usual scope.? Tradewinds did end up securing a loan from a larger bank, but it took some doing. ?I would go to themajors,? Dominique remembered, ?and they would say if you?re not a $10 million loan, we don?t even want to talk to you, unless you?re a five-ves- sel fleet.? The Smith?s thought they would have a good chance to secure financ- ing the Finance group that loaned capital to both their grandfather andtheir parents when they started out. But the large lender did not take on Dominique and Rachel?s third-gener- ation start-up, demonstrating that the lending market has definitely changed.?I would say this to anyone wanting to go to a bank for a start up loan for a single vessel right now,? Dominique warned, ?unless you have a huge amount of capital to put down, I think the chances are just about none.? What it will be like in five years is anyone?s guess, he said, adding ?with all this new regulation, it?s going to get harder and harder for one-boat operations to pop up.? TIGHTERREGULATIONSFOR TOWING VESSELS?The regulatory side of things ? that?s always a moving target, espe- cially with Subchapter M coming out. But when Rachel, Lis and I start- ed the business we wanted to start with a strong safety culture. We elect- ed to immediately join theResponsible Carriers Program (RCP) with AWO,? Dominique said. Although Tradewinds was initially one of the few single boat operators in the offshore towing market to be RCP-approved, the decision paid off. The Coast Guard?s proposed changes to Subchapter M ? specifical- ly the inspection of towing vessels ? presents a new set of challenges to companies, especially small operators.?They?re going to clamp down on bad steel and that?s where I see the most dramatic financial impact ofSubchapter M,? Dominique said. When the Coast Guard issues a Certificate of Inspection (COI), ?every five years they will measure the thickness of the steel on a vessel, as I understand it,? said Dominique, ?so if your vessel has any weak spots you?re going to have to the renew steel.? Renewing steel in shipyards (Images courtesy Tradewinds Towing, LLC) Dominique Smith (left), co-owner of Tradewinds Towing LLC, grew up on a tugboat and now runs a family company with his sister, Rachel (center), and his wife, Lis (right), who serves as the CFO. MN#11 (50-65):MN 2011 Layouts 11/3/2011 11:51 AM Page 52