Have an SBA Loan, Although Need Additional Capital to Fuel Your Craft Brewery, Brewpub, or Taproom?

Today’s brewmaster and craft brewery owner is constantly on the lookout for growth opportunities and must move quickly to take advantage of them. What if you need a quick injection of capital to buy a craft brewery bottling machine, build out your taproom, purchase a new canning system, or open a brewhouse? An opportunity for an acquisition or expansion can arise suddenly and these situations for growth need an immediate response, not to mention immediate cash. And of course, there will always be emergencies and cash flow gaps that need to be quickly managed with working capital.

But what happens if you have an SBA loan in place and need additional capital? The chances of your bank loaning out additional capital is pretty slim, and even if they did, you could grow old waiting for it. The reality is, banks move exceptionally slow and they are not conducive to the fast moving business model of a craft brewery. On average, it takes 2-8 months to fund a bank, or SBA loan, not to mention the list of documents that would be requested just to increase your credit line would be endless. This is only one reason why LVRG has excelled in the brewery finance space. Working with banks can be a nightmare, we know first hand. Don't stress, we have a few alternative options for you to consider, if you have an SBA or bank loan in place and can't get the additional capital you need from from your bank. 

Keep in mind, the key here is growth and our brewery funding options are the perfect solution for craft brewery, microbrewery, brewpub or taproom owners looking to take advantage of growth opportunities. So what are some of these brewery financing options?

#1. Revenue Based Brewery Financing:

A revenue based loan could be your breweries lifeblood and provide it with several financial benefits. When your brewery is growing, chances are you'll need an injection of cash to continue its growth. Bank loans are often times too restrictive and near impossible to obtain these days. In this situation, a revenue based loan may be the best solution. If you use it wisely, a revenue based loan could do wonders for your brewery. Without being capitalized, chances are you will wind up in a growth stalemate. Here are three ways that revenue based loan can save your brewery.

- Helps Grow Your Brewery

If your brewery is under 2 years old and starting to scale, you obviously want to ride the wave. You cannot do this without a dependable source of capital. Bank criteria is typically a minimum of 2 years in business, strong cash flow, positive ratios and near perfect credit. However, a revenue based lender will fund newer breweries, with less stringent credit requirements and use of capital restrictions. This type of loan will give you a shortcut to cash since it only requires a few months of business bank statements; whereas banks require 2 to 3 year business and personal tax returns, income statement, balance sheet, personal financial statement, debt schedule and countless other documents to complete loan package. Many times, your bank statements are enough to demonstrate to a revenue based lender that you can repay your loan.

- Get Cash Quickly

You're busy brewing beer and running a business, you don't have to time to compile overly detailed loan packages and chasing after loan sources. All you know is that you need cash quickly and even if you could get approved for a bank loan, is it really worth all the trouble? A revenue based loan will provide cash quickly with a very short turnaround time. If you are prepared to apply for a revenue based loan and have the appropriate supporting documents ready to go, you may be able to get funding in a matter of days. Compare that to a bank loan where the loan process is on average 2 to 4 months. This is one of the main advantages of a revenue based loan. Some businesses actually consider this a lifesaver, and will go this route over a bank loan any day.

- No Lingering Debt

A revenue based loan will not weigh you down with long-term debt. When you obtain a revenue based loan, you will not be looking at 5 to 10 years to repay a loan for money that you're using today. Think about it, why would you want the headache of paying off a 2015 marketing campaign all the way into 2025? Not to mention, having this type of long-term loan could hurt your chances for getting funding in the near future, which all breweries will need if they plan to scale. With a revenue based loan, you will pay it off in roughly 6-12 months, which makes more sense for short-term expenses. Additionally, lenders are usually willing to replenish the loan after roughly 50% is paid down, so you can continue getting more capital along the way. One more point to mention, going the bank route you'll also have to be aware of up-front fees, equity injections, referral fees, packaging fees, guarantee fees, and closing costs.

As you see, the preceding three steps show you how a revenue based loan could be advantageous for your brewery. It helps you grow your brewery quickly and it does not saddle you down with long-term, highly encumbering debt. It gives you the cash that you need quickly, to grow your brewery your way. What more could a growing brewery need?

#2. Business Cash Advance or MCA:

A Merchant Cash Advance (MCA) can provide craft brewery owners with an upfront fixed amount of cash in as little as 24 hours. The funding amount is based upon a percentage of the businesses credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The business pays back the advance, plus a percentage, often referred to as a discount factor, from a portion of their credit card receivables or cash available plus a percentage which is often referred to as a discount factor. The remittances are drawn from the business customer on a daily, weekly or monthly basis until the obligation has been met. An MCA is not technically a small business loan and as such MCA's are not limited in what rates they charge or what terms they establish and therefore often have high interest rates. For this reason it is very important for a brewery owner to be completely aware of how the MCA product works and how it could affect their brewery. MCA's are good options for brewery owners who may not have strong credit but have lots of credit card activity and need financing quickly.

#3. Cash Flow Loan

Even if your brewery is growing, you may find yourself needing extra cash to cover day-to-day expenses such as payroll, rent and inventory, or to pay for short-term projects that could grow your revenue in the long run. Uneven cash flow is one of the biggest challenges of breweries throughout the country.

For this type of business financing, lenders provide you funds and use your future expected cash flow as collateral for the loan. You’re essentially borrowing from cash that you expect to receive in the future by giving the lender the rights to a predetermined amount of these receivables. These are primarily used for working capital or take advantage of short-term ROI opportunities. Your credit scores will usually be checked, but they play less of a role. As the name indicates, the lender is more concerned with inspecting your cash flow (usually bank statements) to approve your application. Turnaround time is another great feature of a cash flow loan, as funding usually takes place in a matter of days.

#4. Brewery Expansion Loan - Designed for prime craft brewery, microbrewery, brewpub, or taproom owners businesses with better risk profiles. our business expansion loan is an extended-term loan with rates ranging from 9.99% - 36%, terms of 18 to 24 months, multiple payment options, and loan sizes up to $250,000. It’s large-scale brewery growth capital if you're looking to invest in bigger projects, with the same speed and simplicity LVRG is known for.

What are the benefits of a Brewery Expansion Loan, Cash Flow Loan, Revenue Based Loan, or Business Cash Advance?

  • Much quicker approval times from LVRG than a bank. This translates to faster cash-in-hand, allowing you to take advantage of current market prices.

  • Whereas business loans from a bank require you to have collateral in order to gain favorable consideration, LVRG requires you to be subject to a limited amount of conditions.

  • A cash flow loan or revenue based loan is also much more beneficial to the cash flow of a brewery since it does not require any monthly payments or upfront fees that are characteristic of long term SBA loans.

  • There is no limitation on how the funds acquired from a brewery expansion loan, cash flow loan, MCA, or revenue based loan can be used. Funds that are loaned through a financial institution must be used for the stated purpose by the business. As a result, money from a business loan has a very narrow scope of action as compared to money that comes from a cash advance or fast working capital loan.

So there you have it, 4 quick, efficient and “obtainable” brewery financing options to sustain, or scale your craft brewery, microbrewery, brewpub, or taproom. It’s important to point out that all brewery financing options mentioned above along with the SBA are viable options, they just all serve a different purpose. All the options mentioned above are able to work around your current SBA loan, and subordinate lien positions. This is another huge advantage, since the SBA locked up every asset to your name, along with the business. Brewery Expansion Loans, Cash Flow Loans, Revenue Based Loans and Business Cash Advances from LVRG have helped hundreds of craft breweries just like yours, not only turn the corner, but pull ahead in the race. We not only love craft beer, but we are passionate about growing craft breweries across the country. LVRG Funding is the nation’s go-to source for Brewery Finance and we are here to help you put your stamp on the craft beer map. Call us today toll free for more information (855) 998-5874 or click the banner below to get started!