SBA Loans for Craft Distilleries: Financing an Existing Distillery
Buying an established distillery can require significant capital for the business itself, the inventory and sometimes the building. For many buyers, SBA-backed financing is one of the options worth exploring. SBA loans for craft distilleries may be used, subject to program rules and lender review, to help finance the acquisition of an existing, operating distillery, and in some cases related real estate, working capital or the refinancing of eligible debt.
This article is general information for buyers and owners of existing, operating craft distilleries. It does not address financing a new distillery or equipment on its own. SBA eligibility depends on business structure, use of proceeds, program rules and lender review, and program rules can change. Every loan is subject to lender approval, and nothing here is a commitment to lend.
How SBA Loans Work
The SBA does not usually lend directly. Instead, it guarantees a portion of loans made by participating lenders, which can make lenders more willing to extend financing on terms that fit a business acquisition. The lender still underwrites the loan, sets many of the terms within program rules and makes the final decision.
SBA 7(a) for Distillery Acquisitions
The SBA 7(a) program is frequently used for business acquisitions. Depending on the transaction, proceeds may cover the purchase of the business, inventory, working capital and, in some cases, real estate. Learn more on our page about SBA 7(a) business and real estate loans.
Eligibility Considerations Specific to Distilleries
Businesses that produce alcohol may be eligible under SBA rules, but eligibility is determined case by case. Lenders will look at the business’s structure and ownership, how proceeds will be used, whether the buyer can obtain the required permits and licenses and whether the business meets size and other program standards. Buyers should not assume eligibility until a lender has reviewed the specific transaction.
Inventory and Collateral
Aging spirits can make up a large part of a distillery’s assets, but lenders may treat them cautiously as collateral because their future value is uncertain. Lenders generally focus on documented cash flow and may also take a lien on business assets and, where available, real estate. Personal guarantees from owners are frequently required. Our article on aging spirits inventory explains how inventory is reviewed.
Buyer Equity and Seller Notes
Lenders typically expect the buyer to contribute equity. In some transactions, a seller note may form part of the structure, subject to program rules on how seller financing can be counted and when it can be repaid. See our article on craft distillery seller financing.
Permits and Timing
Because permits generally do not transfer, lenders will want a clear plan for how the buyer will obtain approvals and may condition funding on them. This should be built into the deal timeline from the start.
What Lenders Will Review
- Business tax returns and financial statements
- Sales by channel and inventory records
- The buyer’s personal financial statement, credit and resume
- The purchase agreement and permit plan
- The lease or real estate documents
- Distributor and supply agreements
Our article on craft distillery loan requirements covers these in more detail.
Estimating Payments
Before talking with a lender, buyers can use our SBA loan calculator to estimate payments at different loan amounts and terms. Actual terms depend on the lender and the transaction.
US Professional Funding helps buyers evaluate SBA and other financing options for the acquisition of existing, operating craft distilleries. Learn more about our craft distillery acquisition financing.
