Winery Loan Requirements: What Lenders Look For
Lenders approach wineries with specific questions in mind. Can the business’s cash flow be documented across good and difficult harvests? Will the buyer hold the necessary permits? How much of the price is goodwill, land or wine that will not sell for years? Understanding winery loan requirements helps buyers prepare a stronger request and anticipate what lenders will ask for.
This article is general information for buyers of existing, operating wineries and vineyards. Requirements vary by lender and program, and every loan is subject to lender approval. Nothing here is a commitment to lend or legal, tax or financial advice.
1. Documented Cash Flow
Lenders typically want several years of tax returns and financial statements showing that the business can support the proposed debt. Because harvests and visitor traffic vary, lenders may look at performance over several years rather than a single strong one.
2. A Supportable Price
Lenders will compare the purchase price with earnings, appraisals and inventory. Our guide to winery valuation explains how each part is evaluated.
3. Buyer Experience
Lenders want confidence that the buyer, or the team the buyer is assembling, can run the winery. Relevant experience in wine, hospitality, agriculture or business management may help, as can a plan for retaining the winemaker and key staff.
4. Equity Injection
Buyers are usually expected to contribute their own funds. The amount depends on the lender, the program and the strength of the transaction, and lenders will want to know where the funds come from.
5. Credit and Personal Financial Information
Lenders review personal credit, personal financial statements and, for owners above certain thresholds, personal guarantees.
6. Permits and Compliance
Lenders may require evidence that the buyer has applied for or obtained the permits and licenses needed to operate, and that the winery’s compliance history has been reviewed. Our winery due diligence checklist covers these items.
7. Collateral and Appraisals
Real estate and vineyards may be appraised, and lenders may also consider buildings, equipment the business already owns and inventory. Lenders may treat wine inventory cautiously because its value depends on quality and sales. See our article on wine inventory at closing.
8. A Transition and Business Plan
Lenders frequently ask how the buyer will handle the first harvest, club retention, distributor relationships and seasonal cash needs. A realistic plan that recognizes weather and market risks can strengthen a request.
Gaps That Can Slow a Winery Loan Request
- Financial statements that do not reconcile with tax returns
- Inventory records that do not match production and tax reports
- No clear plan for who will make the wine after closing
- Event or tasting revenue that relies on uses not clearly permitted
Choosing a Loan Type
Depending on the transaction, buyers may consider SBA-backed financing, described in our article on SBA loans for wineries, or conventional business loans. Our conventional loan calculator can help estimate payments, though actual terms depend on the lender.
Documents to Prepare
- Business and personal tax returns and financial statements
- Sales by channel and inventory reports by vintage
- Letter of intent or purchase agreement
- Permit and license information
- Resume and personal financial statement
- Debt schedule and any lease or grape contracts
US Professional Funding helps buyers prepare and finance the acquisition of existing, operating wineries and vineyards. Learn more about our winery and vineyard acquisition financing.
