Exhibit 10(b)

STATE STREET BANK                                   225 Franklin Street
                                                    Boston, Ma 02110-2804

                                                    April 25, 1997


Westerbeke Corporation
Avon Industrial Park
Avon, MA  02322      

      RE:  Loan Facility

Ladies and Gentlemen:

      State Street Bank and Trust Company (the "Bank") is pleased to make 
available to Westerbeke Corporation, an organization organized under the 
laws of The Commonwealth of Massachusetts (the "Borrower") a $300,000 
revolving line of credit (the "Revolving Line of Credit") and term loan 
facility "Term Loan") on the following terms and conditions:

      I.  The Revolving Line of Credit

      1.  Term.  The Revolving Line of Credit shall commence on the date 
hereof and expire on June 30, 1997 (the "Revolving Maturity Date"), unless 
extended by mutual agreement.  

      2.  Notice and Manner of Borrowings.  Subject to the terms and 
conditions hereof, the Bank agrees to make revolving loans provided for 
herein (each, a "Revolving Loan")(the Revolving Loans and the Term Loan, as 
hereinafter defined, collectively, the "Loans").  If a request for a 
Revolving Loan is made orally, it shall be immediately confirmed in writing 
if requested by the Bank.  The outstanding amount of all Revolving Loans 
hereunder shall not at any time exceed $300,000.

      3.  Evidence of Indebtedness.  All Revolving Loans will be evidenced 
by a promissory note in the form attached hereto as Exhibit A (the "Note").  
The Borrower hereby authorizes the Bank to record each Loan and the 
corresponding information on the schedule forming part of the Note, and, 
absent manifest error, this record shall be conclusive and binding.

      4.  Interest Rate.  Principal on each outstanding Revolving Loan shall 
bear interest at a floating rate per annum equal to the Bank's Prime Rate.  
Interest on each Loan shall be calculated on the basis of a 360-day year for 
the actual number of days elapsed.  As used herein, "Prime Rate" shall mean 
the rate of interest per annum announced from time to time by the Bank in 
Boston, Massachusetts as its Prime Rate.

      5.  Payments and Prepayment.  Interest on Revolving Loans shall be 
payable monthly in arrears on the first business day of each month 
commencing May 1, 1997, or on the first business day of the month following 
advancement of the initial Revolving Loans, and on the same day when 
principal is payable, whether upon acceleration following an Event of 
Default as defined herein or on the Revolving Maturity Date.  On the 
Revolving Maturity Date all Revolving Loans, shall be paid in full, 
provided, however that so long as no default has occurred and is continuing 
hereunder, on the Revolving Maturity Date, all outstanding Revolving Loans 
shall be converted into a Term Loan (the "Term Loan") and shall be payable 
as provided herein.  Revolving Loans may be prepaid without penalty and any 
amounts prepaid may be reborrowed subject to the terms hereof.  All payments 
of principal and interest shall be made in immediately available United 
States dollars at the main office of the Bank. 

      6.  Use of Funds.  Proceeds of Revolving Loans may be used only for 
purchase of equipment for which the Bank has been provided an invoice and 
adequate description of the equipment to be purchased.

      II.  The Term Loan

      On the Revolving Maturity Date, unless an Event of Default has 
occurred and is continuing, the outstanding amount of all Revolving Loans 
shall be converted to the Term Loan.  Principal outstanding under the Term 
Loan shall be payable in equal consecutive monthly installments on the first 
business day of each month commencing July 1, 1997 each in an amount 
necessary to fully amortize the outstanding amount of the Term Loan in 60 
such monthly installments.  Interest on principal outstanding under the Term 
Loan shall be payable at either a floating rate equal to the Bank's Prime 
Rate per annum or a fixed rate of interest quoted by the Bank as its 
applicable cost of funds, determined in the discretion of the Bank, plus 
2.25% percent per annum (such rate, the "Fixed Interest Rate").  Interest on 
the Term Loan is payable commencing on July 1, 1997 and on the first 
business day of each month thereafter with all outstanding principal 
outstanding under the Term Loan with accrued and unpaid interest due and 
payable in full on June 30, 2002 (the "Maturity Date").  The Term Loan shall 
be evidenced by the Note and may be prepaid without penalty in the event the 
Term Loan bears interest at the Prime Rate, and only if the Borrower 
simultaneously pays all Lost Interest Income, cost and expense of the Bank 
in connection with such prepayment in the event the Term Loan bears interest 
at the Fixed Interest Rate.  As used herein, "Lost Interest Income" shall be 
computed by the Bank by determining the interest rate differential between 
the Fixed Interest Rate on the Term Loan and the yield on a United States 
Government Treasury instrument with a similar maturity as the remaining term 
of the Term Loan.  In the event that the rate differential is such that the 
yield on such treasury instrument is greater than the Fixed Interest Rate, 
no Lost Interest Income shall be payable.  In the event that the Fixed 
Interest Rate is greater than the yield on such treasury instrument, the 
difference shall be multiplied by the principal amount of the Term Loan 
being prepaid computed monthly for the remaining term of the Term Loan and 
the present value (using 6 month treasury rate) of such monthly compensation 
shall be calculated and paid to the Bank as "Lost Net Interest Income".  
Amounts of the Term Loan which are prepaid may not be reborrowed.

      III.  General Loan Terms

      1.  Security.  The Loans will be secured by the equipment purchased 
with the proceeds of the Revolving Loans as described in a Security 
Agreement dated January 23, 1996 from the Borrower to the Bank (the 
"Security Agreement").  

      2.  Covenants.  Until all Obligations have been paid in full, the 
Borrower covenants and agrees as follows:

            a)  To maintain as of the end of each fiscal quarter Working 
      Capital of not less than $4,500,000;

            b)  To maintain as of the end of each fiscal quarter 
      Consolidated Tangible Net Worth of not less than $8,500,000 plus 40% 
      of net income earned during the previous fiscal quarter on a 
      cumulative basis;

            c)  To maintain as of the end of each fiscal year a Debt Service 
      Coverage Ratio of not less than 4 to 1; 

            d)  To maintain as of the end of each fiscal quarter a Leverage 
      Ratio of not more than 1 to 1;

            e)  Not to create, incur, assume or guarantee any Indebtedness 
      other than (i) Indebtedness to the Bank, (ii) Indebtedness existing as 
      of the date of this letter agreement and disclosed on Exhibit B, and 
      (iii) other Indebtedness with the prior consent of the Bank;

            f)  Not to create, incur, assume or suffer to exist any 
      mortgage, pledge, security interest, lien or other charge or 
      encumbrance upon any of its assets or properties, other than (i) those 
      in favor of the Bank, (ii) those shown on Exhibit B and (iii) those 
      for which the Bank has given its prior written approval;

            g)  To (i) duly observe and comply with all applicable laws, 
      including without limitation, those pertaining to environmental 
      matters and the release or threat of release of hazardous substances, 
      and pension and retirement plans, and pay all taxes and governmental 
      charges prior to the time they become delinquent, (ii) maintain in 
      full force and effect all licenses and permits necessary in any 
      material respect for the proper conduct of its business, (iii) keep 
      its properties and assets in good repair and insured in such amounts 
      as is customary in the industry and as the Bank may require, (iv) 
      remain engaged substantially in the business in which it is currently 
      engaged, (v) not sell or dispose of any assets except in the ordinary 
      course of business or merge or consolidate with or into any entity, 
      (vi) not pay any dividends on any class of stock or make any other 
      distribution or payment on account of such stock in any fiscal year in 
      excess of net income earned in such fiscal year, (vii) comply with all 
      terms and provisions of all documents evidencing or securing any 
      Indebtedness to any party other than the Bank ("Other Indebtedness"), 
      (viii) immediately notify the Bank of any default or event of default 
      with respect to Other Indebtedness and to provide to the Bank a copy 
      of any notice received by the Borrower relating thereto or any notice 
      or claim of any such default, and (ix) immediately notify the Bank of 
      any default or event of default hereunder and of any litigation or 
      governmental proceeding commenced or threatened in writing against the 
      Borrower;

            h)  To permit the Bank upon reasonable notice to visit and 
      inspect the properties of the Borrower and make copies or abstracts 
      from the Borrower's books and records;

            i)  To pay (i) all fees, costs and expenses incurred or paid by 
      the Bank in connection with the administration, enforcement or 
      amendment of this letter agreement or any other documents executed in 
      connection herewith including any fees associated with commercial 
      finance exams conducted by the Bank;

            j)  Until the Maturity Date, to submit to the Bank: (i) within 
      60 days of the end of each fiscal quarter of the Borrower, Borrower's 
      financial statements, including balance sheet and income statement, 
      together with a certificate of compliance executed by the chief 
      financial officer of the Borrower in a form acceptable to the Bank, 
      (ii) within 120 days of the end of each fiscal year of the Borrower, 
      Borrower's annual financial statements audited/reviewed by a certified 
      public accountant acceptable to the Bank, (iii) such other financial 
      statements and information as the Bank may reasonably request from 
      time to time and (iv) within 10 days after the making of any Revolving 
      Loan, a copy of the invoice with respect to equipment purchased using 
      the proceeds of such Revolving Loan; and

            k)  Execute and deliver such additional instruments and take 
      such further action as the Bank may reasonably request solely to 
      effect the purpose of this letter agreement and the Loans evidenced by 
      the Note.

      3.  Representations and Warranties.  The Borrower represents and 
warrants that:

            a)  It is a corporation duly organized, validly existing and in 
      good standing under the laws of the jurisdiction of its incorporation, 
      has all requisite corporate power and authority to own its property 
      and conduct its business as is now conducted, is duly qualified and in 
      good standing as a foreign corporation and is duly authorized to do 
      business in each jurisdiction where the nature of its properties or 
      business requires such qualification and maintains no permanent 
      offices, assets, employees or business operations in any state other 
      than in The Commonwealth of Massachusetts, provided, however that the 
      Borrower may from time to time maintain personnel and assets 
      temporarily at locations outside of The Commonwealth of Massachusetts;

            b)  The execution, delivery and performance of this letter 
      agreement, the Note and the Security Agreement (i) are, and will be, 
      within its corporate power and authority, (ii) have been authorized by 
      all necessary corporate proceedings, (iii) do not, and will not, 
      require the consent of the stockholders of the Borrower or approvals 
      of any governmental authority, (iv) will not contravene any provision 
      of the charter documents or by-laws of the Borrower or any law, rule 
      or regulation applicable to the Borrower, (v) will not constitute a 
      default under any other agreement, order or undertaking binding on the 
      Borrower, and (vi) will not require the consent or approval of any 
      obligee or holder of any instrument relating to the Other 
      Indebtedness;

            c)  This letter agreement, the Note, the Security Agreement and 
      related documents constitute the legal, valid, binding and enforceable 
      obligations of the Borrower, except as the same may be limited by 
      bankruptcy, insolvency, reorganization, moratorium or other laws 
      affecting the enforcement of creditors' rights generally and by 
      general equitable principles;

            d)  All financial statements previously furnished to the Bank by 
      it were prepared in accordance with generally accepted accounting 
      principles and present fairly and completely the financial position of 
      the Borrower.  Since the date of such statements, there has been no 
      material, adverse change in the assets, liabilities, financial 
      condition or business of the Borrower other than in the ordinary 
      course of business;

            e)  The Borrower has good and marketable title to all its 
      material properties, assets and rights of every name and nature 
      purportedly owned by it, except for encumbrances shown on Exhibit B;

            f)  There is no litigation, arbitration, proceeding or 
      investigation pending, or to the best of the Borrower's knowledge 
      threatened, against the Borrower except those previously disclosed by 
      the Borrower to the Bank in writing; and

            g)  The making of each Loan hereunder shall be deemed to be a 
      reaffirmation by the Borrower as to the representations and 
      warranties contained in this paragraph and confirmation that no Event 
      of Default has occurred hereunder.

      4.  Availability of Loans.  The availability of Revolving Loans under 
this facility is subject to satisfaction of the following:

            a)  Receipt by the Bank of a duly executed copy of this letter, 
      the Note and a Clerk's certificate relating to corporate proceedings;

            b)  There shall have occurred (i) no Event of Default continuing 
      beyond any applicable cure periods under this letter agreement or the 
      Security Agreement and no Event of Default shall occur after giving 
      effect to the making of the requested loan, and (ii) no material 
      adverse change in the assets, liabilities, financial condition, 
      business or prospects of the Borrower, as determined by the Bank 
      acting in good faith; and

            c)  Completion of such due diligence and other matters and 
      receipt of such additional documentation as the Bank may reasonably 
      require.

      5.  Events of Default.  It will be an Event of Default hereunder if 
any of the following events occurs:

            a)  the Borrower fails to pay when due any amount of principal 
      or interest on any Loan or any fees or expenses payable hereunder or 
      under the Note on the due date therefor; or 

            b)  the Borrower fails to perform any term, covenant or 
      agreement contained in this letter agreement, which in the case of 
      section III2g) of this letter agreement only continues for 15 days 
      from the earlier of the date when the Borrower first becomes aware of 
      such failure or receives notice from the Bank as to such failure, the 
      Note or the Security Agreement or any other agreement or document 
      executed in connection with this letter agreement continuing beyond 
      any applicable grace periods; or

            c)  there shall occur any material adverse change in the assets, 
      liabilities, financial condition, business or prospects of the 
      Borrower as determined by the Bank acting in good faith or a change in 
      the senior management or controlling ownership interest of the 
      Borrower from that existing on the date hereof; or

            d)  any representation or warranty of the Borrower made in this 
      letter agreement, the Note, the Security Agreement or any other 
      document executed in connection with this letter agreement shall prove 
      to have been false in any material respect upon the date when made or 
      deemed to have been made; or

            e)  the Borrower fails to pay or perform any obligation to the 
      Bank, including under the revolving line of credit made available by 
      the Bank to the Borrower in the original principal amount of 
      $3,000,000 and subsequently increased to $4,000,000 and revolving line 
      of credit/term loan facility made available by the Bank to the 
      Borrower in the original principal amount of $500,000, as either or 
      both of such facilities may be increased, amended, superseded or 
      replaced or an Event of Default occurs under any document evidencing 
      or securing such obligation, or the Borrower fails to pay at maturity, 
      or within any applicable period of grace, any obligations for borrowed 
      monies or advances, or for the use of real or personal property, or 
      fails to observe or perform any term, covenant or agreement evidencing 
      or securing such obligations for borrowed monies or advances or 
      relating to such use of real or personal property, the result of which 
      failure is to permit the holder or holders of such Indebtedness to 
      cause such Indebtedness to become due prior to its stated maturity 
      upon delivery of required notice, if any; or

             f)  the Borrower (i) applies for or consent to the appointment 
      of, or the taking of possession by, a receiver, custodian, trustee, 
      liquidator or similar official of itself or of all or a substantial 
      part of its property, (ii) is generally not paying its debts as such 
      debts become due, (iii) makes a general assignment for the benefit of 
      its creditors, (iv) commences any case or proceeding under any law 
      relating to bankruptcy, insolvency, reorganization, winding-up or 
      composition or adjustment of debts, or any other law providing for the 
      relief of debtors, (v) fails to contest in a timely or appropriate 
      manner, or acquiesces in writing to, any petition filed against it in 
      an involuntary case under the Federal Bankruptcy Code or other law, or 
      (vi) takes any action under the laws of its jurisdiction of 
      incorporation or organization similar to any of the foregoing; or

            g)  a proceeding or case shall be commenced, without the 
      application or consent of the Borrower in any court of competent 
      jurisdiction, seeking (i) the liquidation, reorganization, 
      dissolution, winding-up, or composition or readjustment of its debts, 
      (ii) the appointment of a trustee, receiver, custodian, liquidator or 
      the like of it or of all or any substantial part of its assets, or 
      (iii) similar relief in respect of it, under any law relating to 
      bankruptcy, insolvency, reorganization, winding-up, or composition or 
      adjustment of debts or any other law providing for the relief of 
      debtors, and such proceeding or case shall continue undismissed, or 
      unstayed and in effect, for a period of 30 days; or an order for 
      relief shall be entered in an involuntary case under the Federal 
      Bankruptcy Code, against the Borrower or action under the laws of the 
      jurisdiction of incorporation or organization of the Borrower or 
      similar to any of the foregoing shall be taken with respect to the 
      Borrower and shall continue unstayed and in effect for any period of 
      30 days; or

            h)  a final judgment or final order for the payment of money is 
      entered against the Borrower by any court, or an execution or similar 
      process is issued or levied against property of the Borrower, that in 
      the aggregate exceeds $100,000 in value and such judgment, order, 
      warrant or process shall continue undischarged or unstayed for 30 day; 
      or

            i)  the Borrower permits any employee pension benefit plan, as 
      that term is defined in the Employment Retirement Income Security Act 
      of 1974, as amended ("Erisa") maintained by it to (a) engage in any 
      prohibited transaction as that term is defined in Section 4975 of the 
      internal Revenue Code of 1986, as amended, (b) incur any "accumulated 
      funding deficiency" as that term is defined in Erisa, whether or not 
      waived, or (c) terminate in any manner which would result in the 
      imposition of a lien or encumbrance on the assets of the Borrower 
      pursuant to Section 4058 of Erisa.

      6.  Remedies.  Upon the occurrence of an Event of Default described in 
subsections 5.1(f) and (g), immediately and automatically, and upon the 
occurrence of any other Event of Default continuing beyond any applicable 
cure periods, at any time thereafter while such Event of Default is 
continuing, at the Bank's option and upon the Bank's declaration:

            (a)  The Revolving Line of Credit established hereunder shall 
      terminate and outstanding amounts thereunder will be due and payable 
      on the Revolving Maturity Date and will not be converted to the Term 
      Loan as provided herein;

            (b)  the unpaid principal amount of the Loans together with 
      accrued interest and all other Obligations shall become immediately 
      due and payable without presentment, demand, protest or further notice 
      of any kind, all of which are hereby expressly waived; and

            (c)  the Bank may exercise any and all rights it has under this 
      Agreement, the Note, the Security Agreement and any other document 
      executed in connection herewith, and proceed to protect and enforce 
      the Bank's rights by any action at law, in equity or other appropriate 
      proceeding.

      7.  Notices.  All notices hereunder shall be in writing and shall be 
deemed to have been given when delivered by hand, when properly deposited in 
the mails postage prepaid, when sent by facsimile or when delivered to 
overnight courier.  Notices to the Bank shall be given to State Street Bank 
and Trust Company 225 Franklin Street Boston, Massachusetts 02110 Attn: 
Suzanne L. Dwyer or Corporate Banking Division Executive and notice to the 
Borrower shall be deemed to have been given if given at the address stated 
at the beginning of this letter agreement, Attention: Carleton Bryant.

      8.  Miscellaneous.  No waivers shall be effective unless in writing.  
All amendments hereto must be in writing signed by all parties hereto.  Any 
amounts owing from the Bank to the undersigned, including deposits, may be 
set off against past due obligations of any of the undersigned to the Bank.  
This letter and the Note shall be governed by the laws of The Commonwealth 
of Massachusetts.  The Borrower may not assign or transfer or participate 
any of its rights hereunder and under the Note without consent of the 
Borrower.

      9.  Definitions.  Except as otherwise defined herein, all financial 
terms shall be defined in accordance with generally accepted accounting 
principles.  The following defined terms as used herein shall have the 
following meanings:

            "Capital Expenditures" shall mean any expenditures made or 
            obligations incurred by the Borrower in connection with the 
            acquisition of any equipment or other property constituting 
            fixed assets.

            "Consolidated Current Liabilities" shall mean at any date as of 
            which the amount thereof shall be determined, all amounts that 
            should, in accordance with generally accepted accounting 
            principles, be included as current liabilities on the 
            consolidated balance sheet of the Borrower at such date, plus, 
            to the extent not already included therein, all Loans made 
            hereunder, and all Indebtedness that is payable upon demand or 
            within one year from the date of determination thereof unless 
            such Indebtedness is renewable or extendable at the option of 
            the Borrower to a date more than one year from the date of 
            determination.

            "Consolidated Tangible Net Worth" shall mean" the total assets 
            of the Borrower and its Subsidiaries minus (x) the sum of any 
            amounts attributable to (i) goodwill, (ii) intangible items such 
            as unamortized debt discount and expense, patents, trade marks 
            and names, service marks and names, copyrights and research and 
            development expenses except prepaid expenses, and (iii) any 
            write-up in the book value of assets resulting from any 
            revaluation thereof subsequent to the date of the financial 
            statements last delivered to the Bank and (y) Consolidated Total 
            Liabilities of the Borrower and its Subsidiaries.

            "Consolidated Total Liabilities" shall mean at any date as of 
            which the amount thereof shall be determined, all obligations 
            that should, in accordance with generally accepted accounting 
            principles, be classified as liabilities on the consolidated 
            balance sheet of the Borrower and its Subsidiaries, including in 
            any event all Indebtedness.

            "Debt Service Coverage Ratio" shall mean, at any date as of 
            which the amount thereof shall be determined, the ratio of the 
            total of the Borrower's and its Subsidiaries' (x) net income 
            after taxes for such period, excluding any extraordinary items, 
            plus (b) depreciation, amortization and interest for such 
            period, minus (c) Capital Expenditures for such period not 
            financed by the Bank to (y) current maturities of long term 
            Indebtedness for such period.

            "Indebtedness" shall mean all obligations for borrowed money and 
            other extensions of credit to the Borrower, secured or 
            unsecured, absolute or contingent, whether or not evidenced by a 
            note, bond or other instrument, all guarantees, all obligations 
            reflecting the deferred purchase price of property or other 
            accounts payable, and all obligations of the Borrower secured by 
            a mortgage, lien, pledge or other security interest, together 
            with any interest, charges and fees payable on any of the 
            foregoing.

            "Leverage Ratio" shall mean the ratio of the Borrower's 
            Consolidated Tangible Net Worth to the Borrower's Consolidated 
            Total Liabilities for such period.

            "Obligations" shall mean any and all obligations of the Borrower 
            to the Bank of every kind and description, direct or indirect, 
            absolute or contingent, primary or secondary, due or to become 
            due, now existing or hereafter arising, regardless of how they 
            arise or by what agreement or instrument, if any, and including 
            obligations to perform acts and refrain from taking action as 
            well as obligations to pay money.

            "Subsidiary"  shall mean any corporation, association, or 
            similar organization of which 50% or more of the ordinary voting 
            power for the election of a majority of the board of directors 
            or other governing body of such entity is held or controlled by 
            the Borrower or Subsidiary of the Borrower and including, in any 
            event, Guarantor; or any other such organization the management 
            of which is directly or indirectly controlled by the Borrower or 
            a Subsidiary of the Borrower through the exercise of voting 
            power or otherwise; or any joint venture, whether incorporated 
            or not, in which the Borrower has a 50% ownership interest.

            "Working Capital" shall mean the amount by which consolidated 
            current assets of the Borrower and its Subsidiaries exceeds 
            Consolidated Current Liabilities of the Borrower and its 
            Subsidiaries at the time of determination.

      If the foregoing satisfactorily sets forth the terms and conditions of 
this credit facility, please execute and return the enclosed copy of this 
letter agreement, the Note, the applicable Security Agreement and such other 
documents and agreements as the Bank may request each of which when received 
will be considered to be an agreement executed under seal to be governed by 
the laws of The Commonwealth of Massachusetts effective when received by the 
Bank.  We are pleased to provide this loan facility and look forward to the 
ongoing development of our relationship.


                                         Sincerely,

                                         STATE STREET BANK AND TRUST COMPANY



                                         By: /s/ Suzanne L. Dwyer
                                                 Suzanne L. Dwyer
                                                 Assistant Vice President

Acknowledged and accepted:


WESTERBEKE CORPORATION


By: /s/ Carleton F. Bryant III
        Carleton F. Bryant III
        Executive VP and COO

Date:  April 25,1997



Exhibits

A-Note
B-Indebtedness/Encumbrances