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India Pale Ale, Imperial Porter, Lager, Blonde Ale – the varieties of craft beer styles are nearly endless. Although impacted by the coronavirus pandemic, craft beer still represents the growth segment of the beer brewing industry.
From Seattle to Miami, microbreweries are revitalizing and reinventing beer as we know it. Industry experts expect the craft beer trend to continue to grow in relevance in the coming years.
If you’re interested in starting or acquiring a craft brewery, you’re looking at a growth industry. Craft beer sales made up over 25% of all beer sales in 2021, with $26.8 billion spent on craft beers, a 21% increase over 2020 sales. 2022 is expected to be even stronger.
An SBA loan for a microbrewery can be used for buying brewing equipment, purchasing ingredients (hops, malt, barley, etc.), refinancing debt, expanding, or even purchasing a new brewery. And you can take up to ten years to repay an SBA loan.
Benefits of owning a brewery
The biggest benefits of owning a brewery are owning your own business and being involved in a growth industry. Beer has been brewed and consumed for centuries, and there is no sign of the growth slowing for microbreweries.
How to obtain financing to buy a brewery
If you’re looking for microbrewery financing, consider applying for an SBA loan. The various loan programs offered by the Small Business Administration can help provide the financing you need to set up your operation.
The SBA is a government agency that doesn’t lend you the money directly. Instead, it guarantees a significant portion of your loan. That lowers the risk profile for SBA’s lending partners, which include conventional banks and financial institutions, so they’re more willing to approve loan requests.
You also must put significantly less cash or equity down to qualify with an SBA loan. And, with an SBA loan, no covenants or collateral is required.
The most common SBA brewery loans include the SBA 7(a) and Express loans.
SBA 7(a) loan for buying a brewery
The 7(a) is the preferred SBA loan for breweries. You can use the funds made available through this program to purchase equipment and supplies, refinance debt, expand your current location, or even purchase a new brewery.
If you own an existing brewery and want to buy out a partner, you can utilize the funds from an SBA 7(a) loan for that purpose.
The maximum SBA loan for a brewery is $5 million. These term loans are generally repaid with monthly payments that include interest.
The payment stays the same for fixed-rate loans since the interest rate is locked in. However, for variable rate loans, it’s up to the lender to request a different payment amount if the interest rate changes.
SBA Express Loans for breweries
SBA Express Loans are a part of the agency’s 7(a) loan program. Up to $500,000 can be borrowed under an Express loan. The approval times are typically much faster for these loans.
If approved, the funds can be utilized for equipment purchase, working capital, and real estate. Do remember that Express loans over $25,000 have a collateral requirement. The SBA usually responds to Express loan applications within 36 hours.
The lenders ultimately make all eligibility and credit decisions. The market prime rate plus 4.5-6% interest is applied with repayment terms of up to 10 years.
How to apply for an SBA brewery loan
Access our network of SBA lenders that includes leading nationwide banks, credit unions, and other financial institutions. Our lending partners are experienced handling applications for microbreweries, so they will diligently pursue your opportunity.
There are countless SBA approved lenders that are ready to offer you a brewery SBA loan. These are just some of the top lenders:
| Rank | Bank | City | State | # of Loans | Avg Loan $ | Avg Interest |
|---|---|---|---|---|---|---|
| 1 | Live Oak | Wilmington | NC | 8 | $893,125 | 6.4% |
| 2 | Dogwood State Bank | Raleigh | NC | 6 | $1,050,367 | 7.6% |
| 3 | M&T | Buffalo | NY | 4 | $423,500 | 5.9% |
| 4 | The Huntington National Bank | Columbus | OH | 4 | $86,625 | 5.7% |