How to Find Funding for a New Brewery (Part 4)
Below is a listing of common (and not-so-common) funding options:
- SBA loans
- Depending on your situation, this may be your best bet…connect with Scott Birkner at Dogwood State Bank, firstname.lastname@example.org.
- You can learn more about SBA loans and find a brewery lender in this podcast.
- Traditional business loans
- These require a strong credit history and good adherence to the “5 C’s”
- Character, capacity, capital, collateral, and conditions
- Personal savings, family and friends
- The usual starting point for funding a brewery.
- Don’t forget your friend’s friends. Maybe one of them knows Kevin Bacon.
- Strategic partnerships
- You may be renting space, maybe the landlord wants to own a piece of the brewery?
- This could be a solid way to raise equity and get a deal on rent.
- Crowdfunding and grants
- The money is out there, you just need to go get it.
- Check out this podcast with Tranice Watts for inspiration.
- Supplier and vendor financing
- Brewery equipment companies may have their own financing arm.
- They’ll secure the equipment as collateral, likely take a down payment, and you’re off and running.
- Angel investors and venture capitalists
- The current climate is tough to get money from these folks, but it can be done.
- Make sure your financials projections are solid, you have a decent valuation estimate, and a good understanding of EBITDA.
- Business incubators and business competitions
- These programs may provide funding, mentors or other resources to startups in exchange for equity.
- Business plan competitions or other challenges may provide cash prizes or investments from the sponsoring group.
The bottom line with brewery funding: The capital raise to start your brewery may come from a lot of different places.
Funding your brewery isn’t easy, but with hard work, time, patience, and the four steps below, you can do it:
- Create a sources and uses schedule
- Build the financial pro forma
- Write your business plan
- Review the list of common (and not-so-common) funding sources, and get to work!
P.S. Learn more about the network of beer industry financial professionals: the Beer Business Finance Association. We talk about brewery loans, funding, and cash flow all the time!