winery financing

Lending With Wineries in Mind

Wines & Vines, September 2015:

From start-up to acquisition, merger and succession planning, a winery’s bank should be an informed partner. Bankers with knowledge of issues specific to a winery’s needs—in addition to experience with wider financial issues, markets and patterns—are the ideal choice.

Jeff Clark, Domain Expert for the Wine and Craft Beverage segment at Live Oak Bank commented, “Live Oak’s loan structure, cash flow credit orientation, speed and service differentiate us from other lenders in the industry.” Jeff has been in the industry for more than 20 years and has seen the growth in the demand for lending.


Randall Behrens, Senior Loan Officer at Live Oak Bank, works with a lot of craft beverage producers and answers several common questions about business loans.

“There is money available for wineries and vineyards. And with interest rates still near all-time lows, access to capital is relatively inexpensive. Moving forward with an expansion would be ideal in a market like this,” he says.

“You don’t necessarily need a down payment or collateral to expand, start construction or renovate. If you have cash flow, good credit and a strong business plan—good components of valuation—you can get a loan for your business,” he explains. “Live Oak fills the gap in financing availability for those producers that have established cash flow but lack appropriate collateral to secure loans with conventional lenders.”

Live Oak advises small wineries to consider a Small Business Administration (SBA) loan. The SBA acts like an insurance company, allowing the bank to extend its conventional credit reach. SBA loans tend to be borrower-friendly, flexible to equity and collateral require- ments, have longer terms and no balloons or covenants.

Live Oak Bank has made small business loans a focus of its work since 2008. Today it is one of the top originators of small business loans, with one of the strongest loan portfolios in the country.

Acquisitions and mergers

Tracy Sheppard, another Senior Loan Officer at Live Oak Bank, sees a lot of mergers and acquisitions in the current climate.

“There are things that make a great deal: a ‘meeting of the minds’ between buyer and seller, complementary strengths among the staffs, compatible cultures and a growing revenue stream, just to name a few,” he reports.

Sheppard says the top strengths in any acquisition deal are:

  • Positive sales and earnings trends in the business
  • A business plan from the buyer
  • Continuity (commitments from company managers, key personnel, suppliers and customers)
  • Sellers training buyers (good management transition)
  • Seller financing—the seller is financing 10%-15% or more of the deal, showing confidence in the business under the buyer’s leadership.

Conversely, Sheppard and the Live Oak team have produced a list they call “Five Things That Kill a Deal,” which shows where the weaknesses might be in a business transfer that would cause the bank, buyer or seller to walk away.

“The deals we handle most often in the wine industry have common success and failure points,” he says. “And our experiences made us think lists like the “Five Things” would be useful to share with customers, along with more detailed and personal business advice.”

Communication between a bank and the industry it serves can strengthen successes for both, and Live Oak Bank staff can be found at many wine industry events these days, whether it’s as expert speakers on educational panels and advisory boards, or being on hand for any questions a winery owner or business manager may have.

Live Oak also offers industry finance news, expert interviews, blog posts about wine and craft beverage lending, tips and more at category/wine-and-craft-beverage-news/.

Visit or call Live Oak Bank today at (877) 890-5867.