Editor's choice: First Down Funding business loans
- No prepayment penalties
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- Works with bad credit and most industries
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This page will guide you through some of the loan options for microbrewery and vineyard owners. We’ll discuss your loan options, what they can be used for and how you can start operating your own microbrewery or vineyard.
There are multiple business loans available for aspiring vineyard or microbrewery owners or those who are already running a successful operation. Consider this selection of business loan types to get started with financing.
|Loan type||What it’s best used for||Typical amounts||Benefits and drawbacks|
|Equipment loan||Business essentials like a brewer or wine press||The cost of purchasing equipment||Compare now|
|Term loan||Large one-time purchases and expenses||$5,000–$5 million|
|Invoice financing||Getting an advance on invoices from contractors and other workers||Usually 80% of an amount invoiced and awaiting payment||Compare now|
|Merchant cash advance||Repaying in small, frequent amounts through future transactions||$2,500–$250,000||Compare now|
|Line of credit||Expenses that can come up at any time for virtually any purpose||$5,000–$1 million||Compare now|
|SBA Loan||Large purchases that may require a downpayment||$5,000–$5 million||Compare now|
Producing and selling win or beer is a serious commercial undertaking, even at the smallest scale. You’ll need to factor in the costs of equipment, premises and licenses when considering a business loan.
The array of loan options can be confusing for both first-time business owners and those who have been in the industry for years. Consider your business needs carefully, consult with lenders and always read the fine print before you sign your loan contract. Your choice depends on multiple factors:
You can’t make and sell alcohol without the proper licence. Once you have your equipment installed and operating you can apply for a federal brewing permit with the Alcohol, Tobacco and Tax Trade Bureau. You’ll also need to consider your state and local laws surrounding the production of alcohol. Other considerations include a retailer licence, liquor license and food production license to produce your own alcohol and sell it on the premises.
The US has taxes the production of beer and wine whether you’re selling it locally or exporting it internationally.
Smaller breweries that produce less than two million barrels per year, the first 60,000 are taxed at $3.50 per barrel. As your business grows from 60,000 barrels to two million, the tax rate jumps to $16 per barrel. When business is booming, so are the taxes: Breweries that produce over two million barrels are charged $16 per barrel for the first six million, then $18 per barrel after that.
Wineries have different tax classes depending on the alcoholic content and the amount that is produced. This amount ranges from $0.07 up to $3.15 per gallon. The Alcohol and Tobacco Tax and Trade Bureau has more information on the specific types of wine and how they are taxed, so do your research when considering the taxes you may need to pay.
This doesn’t include county and state taxes. And as the tax codes change, so might these rates, so include a search on the Alcohol and Tobacco Tax and Trade Bureau to get up-to-date rates.
Part of succeeding as a business is branding. If you create a distinctive, appealing and memorable label and name for your beer or wine, consider a trademark. Trademark applications are handled by Patent and Trademark Office, a government body that oversees intellectual property matters. Trademarks can cost up to several hundred dollars, but when you’re building your business, they can be invaluable to making you stand out.
When getting business loan, it’s helpful to know exactly what category and company type you have. Knowing this can give you a clearer idea about what type of financing you need. Here’s a breakdown of the common types of microbreweries and vineyards and how it could affect your costs.
Your business may benefit from a variety of loans, so consider:
Let’s imagine this scenario: Bishop’s End is a microbrewery in Albany, NY run by Michael and Jayne. Established three years ago, Bishop’s End sells craft beer to restaurants across New England.
Michael and Jayne have decided to expand their warehouse brewery. They want to to double beer production and open a restaurant on the premises. Space isn’t a problem and they have funds to cover the cost of installing a kitchen, but they need to a buy a new brewing system in order to produce more beer.
Their loan choice: Equipment loan
The brewing system costs almost $100,000. Michael and Jayne opt for an equipment loan. They choose a four-year loan with a good interest rate of 7.25% and are able to use the brewing equipment as security. They pay a deposit of $20,000, which is 20% of their brewing system cost — a typical down payment requirement for equipment loans — and won’t have to make repayments in the first six months.
Loan applications can be daunting, but the more research and preparation you do, the better your chances are of being approved. If your application is backed by expertise, experience, a solid plan and some assets, you’ll be able to negotiate better rates and financing options.
Here’s what you need:
You don’t have to let lack of capital stop you from opening or expanding your business. Vineyards and breweries take a lot of work to maintain, but by knowing what type of funding you’ll need, you can impress a lender and take your business goals to the next level. Consider all your options when trying to decide what business loans work for you.
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