Essential Tips for Financing Your Brewery or Distillery
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in
the
Business
Financing
Blog
is
provided
for
general
information
only,
does
not
constitute
financial
advice,
and
does
not
necessarily
describe
Biz2Credit
commercial
financing
products.
In
fact,
information
in
the
Business
Financing
Blog
often
covers
financial
products
that
Biz2Credit
does
not
currently
offer.
With
nearly
10,000
breweries
in
the
U.S.
(and
nearly
500
opening
every
year)
and
over
2,000
distilleries,
the
competition
is
hot
and
the
stakes
are
high
for
entrepreneurs
in
this
industry.
Whether
you’re
looking
to
launch
your
first
location,
increase
market
share,
or
expand
your
operations,
one
hurdle
that
prevents
many
people
from
getting
started
is
figuring
out
the
required
brewery
and
distillery
financing
options
(securing
the
right
financing
is
crucial).
In
this
article,
we
explain
the
brewery
and
distilling
financing
options
available
whether
you’re
starting
new
operations,
funding
brewery
expansion,
or
purchasing
an
existing
distillery.
We
explore
both
traditional
and
alternative
financing
options
as
well
as
necessary
preparations
for
the
ongoing
financial
planning
for
distilleries
and
craft
beverage
businesses.
Key
Takeaways
-
Take
the
time
to
accurately
assess
your
funding
needs.
This
will
ensure
that
you
don’t
overspend
or
underspend. -
Regardless
of
your
needs,
there
are
plenty
of
brewery
and
distillery
financing
options
available—both
traditional
and
nontraditional. -
For
craft
beverage
companies
that
are
struggling,
partnerships
with
other
small
businesses
may
help
ease
the
burden
and
create
a
path
to
growth
In
this
article:
Assessing
Your
Financing
Needs
Before
exploring
options
for
small
business
loans
for
breweries
and
distillery
financing,
you
should
understand
what
your
specific
financing
needs
are.
This
will
give
you
a
general
idea
of
how
much
capital
will
be
required
to
achieve
your
business
goals.
Each
entrepreneur’s
financing
needs
will
depend
on
many
factors
including
the
type
of
establishment
they
are
interested
in
operating,
their
current
financial
position,
and
their
short
and
long-term
business
goals.
Before
sitting
down
to
create
a
formal
business
plan
or
budgets,
document
some
basic
information
about
the
new
beverage
business
you’d
like
to
invest
in.
Make
a
preliminary
business
model,
deciding
where
and
how
you’d
like
to
make
beer
or
spirits,
if
you
plan
to
package
and
sell
your
product
in
stores
only,
if
you
plan
to
serve
the
public,
and
if
your
considering
adding
additional
services
or
products,
like
wine,
food,
or
craft
beer
making
workshops.
-
Location
–
Consider
the
city
and
state
where
you’d
like
to
open
your
new
business.
This
will
affect
the
costs
of
real
estate,
marketing
strategies,
and
government
assistance
programs,
distillery
loans
or
brewery
grants
that
you
may
be
eligible
for. -
Type
of
establishment
–
Put
some
thought
into
the
type
of
beverage
business
you’d
like
to
fund.
Some
popular
choices
include
distillery
bars,
microbreweries,
cognac
houses,
taprooms,
and
brewpubs.
Once
you
have
the
basic
details
organized,
it
will
be
easier
to
start
calculating
how
much
money
it
will
take
to
fund
your
new
business.
Some
expenses
you
might
need
a
distillery
or
brewery
loan
for
include
permits
and
licenses,
real
estate
and
necessary
renovations,
equipment,
and
distribution.
Traditional
Financing
Options
As
the
financial
planning
and
budgets
come
together,
it
may
be
obvious
that
to
turn
your
dream
into
a
reality,
you
will
need
to
secure
either
distillery
funding,
craft
brewery
financing,
or
both.
Fortunately,
there
are
several
traditional
brewery
and
distillery
financing
options
to
choose
from
when
it
comes
to
financing
your
dream.
Term
loan
A
term
loan
is
a
traditional
arrangement
where
the
borrower
receives
a
lump
sum
of
money
upfront
and
agrees
to
repay
the
loan
according
to
the
repayment
terms.
Term
loans
can
be
either
secured
with
collateral
or
they
can
be
unsecured,
where
no
collateral
is
required.
Borrowers
may
still
be
required
to
attach
a
personal
guarantee
or
provide
a
down
payment
for
unsecured
distillery
loans.
SBA
loan
SBA
loans
are
a
business
financing
option
where
the
funds
are
partially
guaranteed
by
the
U.S.
Small
Business
Administration.
There
are
several
different
SBA
loan
programs,
but
the
SBA
7(A)
Loan
is
the
most
popular
financing
in
the
craft
spirits
industry
because,
if
approved,
borrowers
can
get
up
to
$5
million
to
use
for
working
capital,
equipment,
and
securing
real
estate.
Alternative
Financing
Strategies
Traditional
funding
sources,
like
the
term
loans
and
SBA
loans
available
through
banks,
credit
unions,
and
online
lenders
may
not
be
a
great
fit
for
every
entrepreneur.
Depending
on
a
borrower’s
business
plan,
creditworthiness,
and
financial
health,
one
of
the
following
alternative
brewery
and
distillery
financing
sources
may
align
better
with
your
goals.
Crowdfunding
Crowdfunding
for
craft
breweries
and
distilleries
can
be
a
way
to
raise
capital
without
a
bank
loan.
It
works
when
an
individual,
or
business
owner,
collects
many
small
contributions
from
different
investors
or
donors.
Most
crowdfunding
is
done
using
platforms
like
GoFundMe
or
Kickstarter.
Business
line
of
credit
A
business
line
of
credit
is
not
a
loan,
but
it
is
a
type
of
revolving
credit
that
works
like
a
business
credit
card.
Approved
borrowers
are
awarded
a
maximum
credit
line
and
can
then
draw
on
that
credit
line
anytime
they
need
capital
for
large
purchases,
upgrades,
or
working
capital.
When
the
balance
is
repaid,
the
funds
become
available
again.
Partnerships
and
Joint
Ventures
Part
of
the
financial
planning
that
goes
into
owning
and
operating
a
craft
beverage
establishment
is
considering
what
ownership
structures
you
are
open
to.
If
you
have
any
financial
concerns
or
feel
you
would
benefit
from
additional
support,
you
may
want
to
consider
a
shared
business
structure
like
a
partnership
or
a
joint
venture
(JV).
Sometimes
considering
these
options
can
even
open
up
venture
capital
for
breweries.
In
a
partnership,
two
or
more
people
enter
business
for
an
undefined
amount
of
time,
have
predetermined
ownership
percentages,
and
usually
form
a
designated
entity.
On
the
other
hand,
JVs
are
typically
started
for
a
specific
purpose
of
blending
complimenting
resources.
The
responsibilities,
profit-sharing
expectations,
term
and
length
of
the
agreement
and
ownership
percentages
are
all
clearly
defined
in
a
joint
venture
agreement.
Both
business
structures
can
offer
significant
financial
relief
and
shared
resources,
which
makes
this
one
of
the
top
brewery
and
distillery
investment
strategies.
Leasing
vs.
Buying
Equipment
The
costs
of
equipment
needed
to
start
a
brewery
or
distillery
of
any
type
can
be
overwhelming.
Some
necessary
equipment
may
include
kegs,
boilers,
fermentation
tanks,
refrigerators,
canning
lines,
bottling
equipment,
and
labeling
machines.
Depending
on
the
amount
of
available
startup
capital,
some
beverage
entrepreneurs
may
benefit
from
leasing
all,
or
some,
of
their
equipment,
while
others
will
still
prefer
to
purchase
their
equipment
outright.
Leasing
equipment
allows
the
small
business
owner
to
have
the
necessary
equipment
to
operate
without
coming
up
with
the
entire
expense
upfront.
There
are
cash
flow
advantages
as
well
as
tax
deductions
for
leased
machinery
and
equipment.
Some
manufacturers
will
offer
direct
leasing
options
or
be
able
to
recommend
a
third-party
leasing
company.
Buying
equipment
requires
a
larger
investment
upfront,
but
has
several
benefits
including
tax
deductions,
increased
net
assets,
and
no
lease
renewals.
If
you
are
leaning
towards
purchasing
equipment
but
are
concerned
about
the
upfront
costs,
consider
equipment
financing.
Asset
financing
in
distilleries
offers
lower
interest
rates
than
traditional
bank
loans
because
the
equipment
acts
as
collateral
on
the
debt,
making
it
a
lower
risk
for
lenders.
Conclusion
Don’t
let
your
goal
of
opening
a
brewery
or
distillery
become
a
pipe
dream.
With
the
right
planning,
you
can
find
the
brewery
and
distillery
financing
that
can
make
your
dream
a
reality.
Whether
through
traditional
loans,
alternative
financing,
or
strategic
partnerships,
a
well-planned
funding
strategy
will
help
you
achieve
your
goals
and
thrive
in
the
craft
beverage
industry.
FAQ
What
are
the
initial
steps
to
secure
financing
for
a
new
brewery
or
distillery?
Start
with
creating
a
business
plan
that
includes
startup
costs
and
projected
earnings.
Then,
explore
both
traditional
and
alternative
financing
options.
How
do
I
determine
how
much
funding
I
need
for
my
brewery
or
distillery?
Gather
approximate
costs
for
licenses
and
permits,
equipment,
operating
costs,
location,
and
materials.
Use
those
figures
to
create
a
detailed
budget.
Are
there
specific
types
of
loans
that
are
best
for
breweries
and
distilleries?
SBA
loans
and
traditional
bank
loans
are
commonly
used.
SBA
loans
offer
favorable
terms,
while
bank
loans
require
strong
credit
and
collateral.
What
alternative
funding
options
are
available
beyond
traditional
bank
loans?
Consider
crowdfunding,
partnerships,
joint
ventures,
or
equipment
financing.
What
are
some
common
mistakes
to
avoid
when
seeking
financing
for
a
brewery
or
distillery?
Most
people
underestimate
how
much
things
will
cost,
so
be
sure
to
get
accurate
cost
information.
And
don’t
just
rely
on
a
business
plan
that
is
“in
your
head”—make
sure
to
put
it
down
on
paper
and
stick
to
it.
Lastly,
many
people
are
intimidated
by
the
thought
of
financing,
but
if
you
explore
all
brewery
and
distillery
financing
options,
you
may
be
surprised
by
finding
something
that
fits
your
needs.
Frequent
searches
leading
to
this
page
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loan,
brewery
financing,
brewery
startup
financing,
restaurant
financing
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