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MicroBrewr 066: How to get an SBA loan for a startup brewery with First Community Bank.

MicroBrewr 066: How to get an SBA loan for a startup brewery

Kris Kennedy works in the Small Business Lending Group with First Community Bank in Roseville, California. They were the first financial institution listed as an allied trade member of California Craft Brewers Association.

The U.S. Small Business Administration’s loan program makes it easier for small businesses to get funding from traditional lending institutions. Kris teaches us how to get an SBA loan for a brewery.

All participating banks must go by the SBA guidelines. There are typically 5 criteria to judge worthiness for a loan:

  1. Cash flow – This could be historical or projected. Can you repay the debt?
  2. Economic environment of the industry – Also includes changes to the industry such a new regulations or supply issues.
  3. Collateral – Can include business assets and personal real estate.
  4. How much the borrower is investing – They typically require 20-25% for startups.
  5. Character – They check your credit score including public records such as judgments and liens. Credit score must be at least 680.

Loan funds can be used for a variety of things. Eligible expenditures include:

  • Operating equipment
  • Real estate
  • Tenant improvement to real estate
  • Construction of a new building
  • Refinancing for business debt
  • Purchase of an existing business
  • Working capital

Loan amounts can range from $350,000 to $5 million dollars. Loans are offered in 10-year and 25-year terms. They’re fully amortized, meaning that the monthly payment will be the same through the life of the loan. There’s usually no pre-payment penalty after the first 3 years.

Kris says the ideal candidate should have experience working in a commercial brewery. Planning on opening a brewpub, have restaurant or hospitality experience. Basically, show that your past experience applies to running a brewery.

If you’re a homebrewer wanting to get an SBA loan, it could help to have awards for your beer. So start entering in contests!

Lastly, Kris says, it’s good to work with a lender that has experience in the industry. If you’re in California, Arizona, Nevada, Washington, or Oregon, and you need funds to start or expand a brewery, get in touch with Kris.

“Not every startup is something that a lender is going to be able to finance.” [Tweet This]

 

Listener question:

From Josh Button: How much business experience should I have? What kind of experience or education would you ecommend?

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Pale ale

Other resources:

You can reach Kris Kennedy and First Community Bank at:

Sponsor:

Beer

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MicroBrewr 046: Start your brewery as a worker-owned co-op, with Sustainable Economies Law Center.

MicroBrewr 046: Start your brewery as a worker-owned co-op

The cooperative business model is gaining popularity. Even many craft breweries are forming as co-ops. If you want to form your brewery as a co-op, Janelle Orsi, Executive Director of Sustainable Economies Law Center, in Oakland, California can answer your questions.

The cooperative business model is still relatively unknown. A worker-owned “co-op” is usually democratically organized, so each employee gets a vote on business decisions and elections for the board of directors. Employees earn dividends based on patronage—the amount of time they have invested in the business, rather the amount of money they have invested.

Other podcasts about breweries as co-ops:

MicroBrewr 047: Proof of concept for a brewpub co-op

MicroBrewr 049: Planning California’s first cooperative brewpub

Cooperative businesses provide many benefits to society:

  • The work source is stable because the employees aren’t as at-risk of layoff.
  • Profits stay in the local economy, rather than going to faraway shareholders.
  • Customers are happier because they know the product is made by sustainable jobs.

Cooperative businesses experience many benefits:

  • Decisions are made from many contributors.
  • Don’t have to pay double taxes like C-Corporations.
  • Workers are happier because they have a say in their environment.

“If we buy beer from a worker-owned cooperative, we’re actually reversing the flow of wealth.” [Tweet This]

 

Listener question:

If you could ask one question to every brewer or brewery owner, what would you ask? Let me know.

Book recommendation:

Check out the entire list of recommended books, click here.

Your Free Audio Book

An upcoming beer style:

Pale Ale

Other resources:

You can reach Janelle Orsi and Sustainable Economies Law Center at:

Sponsors:

Audible

Download a free audiobook.

Audible. Download a free audiobook. https://microbrewr.com/audible

Support MicroBrewr

Help keep MicroBrewr on the air. CLICK HERE for ways you can help.

Subscribe on iTunes             Listen to Stitcher