What You Need to Know About Craft Brewery Expansion Financing

Brewery Expansion Financing

In the current world of craft brewing, it can feel like you’re never quite able to produce enough beer to satisfy demand. By the time the equipment from your previous expansion has been delivered, installed, and is operational, demand for your beer has already outstripped your new production capabilities. Without outside financing, it can be difficult to generate enough cash from the business to pay for your expansion needs. Many breweries are frustrated because traditional bank lenders are unwilling to accommodate their expansion plans. Owners often believe the only way to finance these expansions is through raising equity and/or selling a portion of their business. However, there is an alternative.

At Live Oak Bank, we have a team of lenders dedicated to the Craft Beer industry that understand the difficulties that a growing brewery faces. We work with you to analyze your historical and projected growth to develop an expansion plan that meets your needs.

Equipment purchases must be made strategically, with attention paid to both the size of the expansion (too large and you’ll be saddled with debt on equipment that is not being fully utilized; too small and you’ll outgrow it before you’ve paid much principal on the debt) as well as the timing (taking into consideration lead times on equipment orders with your suppliers as well as current and projected barrel production).

Real estate considerations must also be made strategically in cases where physical space is the factor limiting growth. If you are currently leasing, should you look to purchase or lease a larger location? If you own your building, should you expand on site, and if so by how much?

If you are a growing brewery looking to expand your production capabilities, a loan from Live Oak Bank may be the solution. Contact us to learn more.