SBA Loans for Craft Breweries: Financing an Existing Brewery
Much of a brewery’s value sits in its cash flow, brand and goodwill rather than in collateral a lender can easily rely on. That is one reason many buyers consider SBA-backed financing when purchasing an existing brewery, brewpub or taproom brewery. SBA loans for craft breweries may allow longer repayment terms than some conventional options, which can help make payments fit the business’s documented cash flow, but eligibility and terms depend on the borrower, the business and lender review.
This article is general information for buyers of existing, operating craft breweries. It does not address starting a new brewery or financing equipment on its own. SBA eligibility depends on business structure, use of proceeds, program rules and lender review. Every loan is subject to lender approval, and nothing here is a commitment to lend.
The SBA 7(a) Program
The SBA 7(a) program is a frequently used SBA option for business acquisitions. Proceeds may be used, subject to program rules, to purchase an existing business, its assets and goodwill, and in some cases the real estate it operates from, along with working capital. If the brewery owns its building and the buyer is purchasing it as well, see our page on SBA 7(a) business real estate loans.
Eligibility Considerations
Breweries may be eligible for SBA programs, but every applicant must meet program requirements. Lenders and the SBA consider size standards, the business’s structure and ownership, the character and credit of owners, the use of proceeds and whether the business can repay. Buyers should confirm eligibility early with their lender rather than assume it.
Permits and Timing
Because brewery permits and licenses generally do not transfer, lenders will want to understand the buyer’s plan for obtaining approvals and how that fits with the closing. Coordinating the loan timeline with counsel’s licensing plan can help avoid surprises.
Equity and Seller Notes
SBA lenders generally expect the buyer to contribute equity. In some transactions, a seller note may be part of the structure, and program rules govern how a seller note can be treated, including whether payments may be made during certain periods. Our article on craft brewery seller financing explains these considerations.
What Lenders Review
- Several years of business tax returns and financial statements
- Sales by channel and an explanation of any recent changes
- Excise tax and compliance history
- Distributor agreements and the lease or real estate documents
- The buyer’s experience, resume, credit and personal financial statement
- A transition plan covering the head brewer, staff and key accounts
Our article on craft brewery loan requirements covers documentation in more detail.
Buyer Experience
Lenders frequently look for relevant management experience. Brewing, hospitality, beverage distribution or general management backgrounds can all be relevant, and a strong brewing team staying on may help. A buyer without brewing experience may need to show how production and quality will be managed.
Collateral and Personal Guarantees
Lenders typically take available business assets as collateral and may take personal real estate where required by program rules or lender policy. Owners above a certain ownership level are generally required to provide personal guarantees.
Buying a Second Brewery
Established owners acquiring another existing brewery or brewpub may also consider SBA financing, subject to program rules on affiliation and size. See our article on buying a second brewery.
Estimating Payments
Our SBA loan calculator can help buyers estimate payments under different scenarios. Actual terms depend on lender approval and program rules.
US Professional Funding helps buyers evaluate SBA and conventional financing for the acquisition of existing, operating craft breweries. Learn more about our craft brewery acquisition financing.
