Craft Brewery Debt Restructuring When Cash Is Tight
Breweries frequently carry several obligations at once: an acquisition or real estate loan, equipment loans and leases, a line of credit, credit cards, a seller note and sometimes short-term financing taken during a slow season or after an unexpected repair. Even when the taproom is busy and the beer is good, payments can stack up faster than cash comes in. Craft brewery debt restructuring means reviewing those obligations and evaluating whether some could be replaced with financing that better fits the business’s cash flow. Our page on craft brewery refinancing and debt consolidation explains how we approach these requests.
This article is general information for owners of existing, operating craft breweries, brewpubs and taproom breweries. It is not legal, tax or financial advice, and every situation is different. Owners facing serious financial difficulty should also speak with qualified accountants and attorneys, including about any excise tax obligations.
Why Cash Gets Tight for Breweries
- Seasonality: taproom traffic may rise and fall with weather, holidays and tourism while fixed costs continue
- Wholesale terms: distributor and retail accounts pay on terms, while ingredients and packaging are paid up front
- Inventory: beer in tanks and packaging on hand tie up cash before sales occur
- Repairs and utilities: unexpected equipment repairs or rising utility and wastewater costs
- Stacked short-term debt: several obligations with frequent or high payments
Our article on taproom vs distribution revenue explains how each channel affects cash flow.
Step 1: Build a Complete Debt Schedule
List every obligation, including the creditor type, original amount, current balance, payment amount and frequency, rate or cost, maturity, collateral, personal guarantees and prepayment terms. Include equipment loans and leases, lines of credit, credit cards, term loans, seller notes, tax obligations and any merchant cash advances. A clear picture is the starting point for any conversation with a lender.
Step 2: Understand the Underlying Cash Flow
Restructuring works best when the core business is sound and the problem is mainly how the debt is structured. Owners should review recent financial statements, sales by channel, receivables and a monthly forecast. If taproom traffic is declining, a distributor relationship is weakening or pricing no longer covers costs, those issues need attention alongside any financing changes. Lease terms matter too; see our article on brewery real estate and lease review.
Step 3: Evaluate the Options
- Refinancing: replacing one or more obligations with a longer-term loan, which may lower payments if the business qualifies
- Consolidation: combining several obligations into a single loan with one payment
- Working capital planning: arranging appropriate working capital for seasonal and wholesale cycles; see our page on craft brewery working capital and lines of credit
- Direct discussions with creditors: some creditors may consider modified terms, though they are not obligated to
Depending on the business and the debt being refinanced, options may include SBA-backed loans or conventional business loans. Eligibility depends on program rules, the purpose of the refinance, existing loan terms and lender review.
About Merchant Cash Advances
Some breweries have merchant cash advances among their existing obligations. Lenders review these alongside other debt when evaluating a refinancing request. There is no guarantee that every obligation, including every merchant cash advance, can be consolidated or refinanced, and whether a particular obligation can be included depends on its terms, the business’s cash flow, program rules and lender review.
What Lenders Look For
Lenders evaluating a restructuring request typically want to see that documented cash flow can support the new payments, that existing debt was used for business purposes and that the business has a sustainable path forward. They will review tax returns, financial statements, a debt schedule, payment histories and excise tax filing status. Our article on craft brewery loan requirements explains the documentation frequently requested.
Acting Before Problems Grow
Owners generally have more options when they address debt before payments are missed. Reviewing obligations early, keeping financial records and tax filings current and tracking sales by channel closely can make a meaningful difference in what may be possible.
US Professional Funding works with owners of existing, operating craft breweries to review their current debt and evaluate refinancing options. Not every existing obligation will qualify to be refinanced, but we can help you understand which options may fit.
