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If being a homebrewer for the rest of your life just isn’t cutting it, you may be pursuing your dream of opening your own craft brewery. And, if you’ve done any homework, you know that managing the finances of a brewery can be a daunting process. Breweries are incredibly capital-intensive businesses for which a small business loan is often necessary: There’s outlay for grain, adjuncts, hop contracts, fermenters… and, wow, that water bill. That’s where a small business loan for a brewery comes in. The right capital can help you get your craft brewery up and running—or, if you’re already doing the job, finance new and different parts of your existing business.
There are lots of different types of small business brewery loans that can help you. Part of the search is knowing what, exactly, you’re looking for. We’ll go over the best brewery loans by use case as well as what you’ll need to get a craft brewery loan. From there, you’ll be able to navigate the sometimes-complex world of brewery financing, and definitely spend more time worrying about crafting the perfect bottom-fermenting brews than keeping yourself away from bottom-feeding lenders.
As you’re looking for a brewery loan, you’ll probably be pleased to find that you have many different options. These are mostly shaped by the way in which you’ll use your capital, and how quickly you can get ahold of it, but there are a few other nuances for each loan that we’ll get into as well. (We’ll also explain in greater detail below how to choose the best loan depending on your needs.)
The most important thing for you to remember right now? The best loan to help you get an Instagram-worthy label designer is probably not the right loan to help you finance a new grain elevator. Deciding where you need the funds to go will help you decide which brewery loan is right for you.
And if your brewery is in its startup phase, keep in mind that you will likely have to get more creative with your funding options. That’s because most small business loans—of any type, not just specifically for breweries—generally require some time in business, solid credit, and a history of revenue generation for the business. If you’re just starting up—well, you won’t have all of those requirements.
In that case, flexibility is key to getting business loans for breweries that are just starting up. You may not be able to get exactly the capital amount you want, or the type of loan you want, but remember that getting business capital as a startup entrepreneur isn’t easy across the board.
Now, we’ll go through the best small business loans for breweries by what they’re most helpful for. Of course, some of these loans can be used in different ways, and more than one type of loan may intrigue you. That’s great—and remember that you can apply for different types of small business loan types with a single application.
Think of this overview as a strategic education. It’s important to be familiar with the different types of loans out there, because part of finding the best brewery loan is to understand which types of loans enable you to optimize capital in certain ways—and not pay a ton for the ability to borrow in the process.
For most types of businesses, an SBA loan is the best kind of loan you can get. That’s because these government-backed loans have the least expensive terms, highest capital amounts, and longest repayment periods available.
SBA loans are available to help finance commercial real estate (taproom, anyone?) or provide general working capital, among other purposes, and are structured as either traditional term loans or business lines of credit (more on that in a few). And, unlike other loans with short terms of a few months to a few years, SBA loans offer repayment periods of seven to 25 years.
If these brewery loans sound too good to be true, that’s not exactly the case—but they’re not available to everyone. Because of their desirable terms, SBA loans are awarded to the most creditworthy candidates who can prove a strong history of success in business. That doesn’t necessarily mean profitability, but rather several years of operation with consistent and growing revenues.
If you don’t quite have these credentials, don’t worry: There are plenty of other types of brewery loans to pursue.
One of the biggest expenses that breweries experience when growing is the massive capital outlay that’s required for equipment. There’s the brite tank. And the forklift. And tables for the taproom. And why are keg washers so expensive?
An equipment loan can enable you to directly finance the purchase of these fixed assets. You bring a quote to a lender, whom you work with to approve you for capital to purchase the equipment in question. This then becomes the collateral for the loan—so, in the case that you can’t repay your loan, a lender can seize the equipment you’ve financed as payment. This “self-collateralization” often helps lower the cost of these loans, depending on what you’re financing, and may even make equipment financing an option for breweries that haven’t been in business for very long.
Keep in mind, though, these aren’t general working capital loans, meaning that you can’t use the cash to buy anything but the equipment you got the quote for. If you’re looking for something more flexible, keep reading.
You may find that one month, you need a new shipment of teku glasses. The next, you’ll need to rent a canning line. Your brewery expenses will vary from month to month, or even day to day, as is the case for most small businesses.
A business line of credit can be the perfect loan for situations like this. In a way, you can think of it as a more powerful business credit card; you work with a lender to get approved for a credit line, and you can “draw” against it for funds as you need it. Often, these credit lines are higher, with lower interest rates, than business credit cards. In this way, many businesses find business lines of credit to be a secret weapon.
The best part is you only have to pay interest on what you use. So, if you have months where you don’t need to borrow anything, you won’t owe interest just for having that capital available to you. These are also great for cash-flow crunches, which can help take care of life-or-death overhead expenses like payroll and utilities.
Some lenders only require six months in business to get a business line of credit, so young breweries with good finances (especially a strong credit score) can often access these, as well as established businesses.
Although you may have access to equipment financing and a business line of credit as a nascent business, you might also want to look into a type of loan that’s specifically helpful for startups: SBA microloans.
These loans, part of the SBA program, provide capital up to $50,000 for young businesses starting up in their local communities. They aren’t able to facilitate the hundreds of thousands of dollars that some other loan programs can, but even tens of thousands may be just what you need to get going.
Another bonus for some: Many of these loans go to entrepreneurs that may have a harder time securing capital, such as minorities, veterans, and women.
See Your Business Loan Options
Say that you still need access to working capital, but none of these loans are quite right for you for any number of reasons. Another option to help finance your brewery is to use a business credit card to take care of some of your expenses.
Specifically, a 0% introductory APR business credit card can enable you to spend without paying interest for a predetermined period of time—often, more than a year. During this period, you can carry a balance without accruing interest. And, as you might expect, business credit cards are often simpler to qualify for than small business loans.
Of course, you’ll need to be smart about how you use your card. If you don’t pay down your balance by the time the introductory period ends, you could be stuck with a very high bill when the interest rate kicks in. But if you’re a good planner, you can find that a 0% intro APR credit card can be a huge help to finance your business (especially in the early days).
We’ve gone over a few different brewery loan types, so to wrap up, let’s discuss how to pick from all of the choices above.
As you might have noticed, the use cases for these brewery loans vary—especially in terms of how flexible the capital is for use. For example, a business line of credit, or even some types of SBA loans, will be more flexible than money borrowed to finance a fixed asset. Before you start applying for brewery loans, you’ll want to ask yourself what you envision using the money for—and if that’s the only use case you can think of for now.
Risk evaluation is the name of the game for lenders. After all, they want to make sure they get their money back, and the way they figure out whom to take a gamble on is through your financial profile. That includes factors such as your personal credit score, time in business, revenues, balance sheet, bank account balance and cash flow, and past track record in relevant industries. Not all of these pieces are relevant to every lender and type of loan, but the better your financial standing, the more options open up to you. (And, conversely, the worse your financial health, the fewer options you’ll have.)
If you’re just trying to make payroll or need to make repairs, for instance, you will probably need faster access to cash than others. Some brewery loans enable you to gain approval in as little as a day (business lines of credit, equipment financing, business credit cards), while others may take several months (namely, SBA loans). Knowing your time limit will help you zero in on the best type of brewery loan for your small business.
You should feel encouraged by the plethora of brewery loan options to help you finance your craft brewery (whether you’re keeping a stalwart operation going, or financing a new venture). With different levels of flexibility and different timelines, you should be able to narrow in on your best craft brewery loan type. And if you don’t have a spotless financial history, don’t worry—there are still plenty of options for you.
So, sure, running a brewery comes with big expenses. But, with the right financial assistance, running that brewery comes with big rewards, like the satisfaction of watching someone enjoy a whole flight of your beers, or bringing a new vibe to your local community.
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