Whether you run an established craft brewery or are just starting out, there are times when you might need “beer money” - outside funding to pursue new opportunities or endure a period of uncertainty. On Tap Credit Union is here to help you understand the ins and outs of your financial options when it comes to financing that perfect brew.
Cash is King
When looking at why most craft breweries fail, it most often comes down to one simple fact: they run out of money. Cash is the fuel that keeps the business running. When you think of how much money it takes to open a brewery, what number comes to mind? Depending on location and need, it can cost anywhere from $500,000 and $1,000,000 and beyond. Maybe that seems feasible but more likely, if you’re reading this, you’re asking, who has that kind of money? Do I really need that many glasses? That’s where your loan options come into play.
Factors that Lenders Use to Evaluate and Decide Loans
Numerous factors are considered by lenders when it comes to whether or not they are willing to give you that ‘beer money’ you are looking for. Not only will a lender look at the business revenue, business debit, and risk rating score, but they’re also going to take a look at your personal credit, debt, and income. If that gives you pause, it may be time to stop by On Tap and talk with someone about how you can improve your financial stability.
Loan Types
Lending needs can differ widely from each other - from finding the right space/location to just needing a little extra help to replace your old fermentation tank. Either way, your lending needs will help to determine whether you have a short-, mid-, or long-term lending need. Scroll to the table below to see some of the factors to consider when it comes to each loan type.
| Loan Type | Lending Need | Pros | Cons |
| Business Credit Card | Short-Term | • Helps with monthly cash flow • Pay off statement with no interest |
• High interest rates • Rates are variable and can adjust |
| Lines of Credit | Short-Term | • Emergency funds • Lower rates and payments |
• Low payment is usually interest only • Rates are variable and can adjust |
| Term Loans | Mid-Term | • Food for budgeting purposes • Food for equipment, truck loans |
• Prepayment penalties for paying it off early • Pay mostly the interest in first few years |
| Small Business Admin Loans | Long-Term | • Good for large projects/purchases • Less money needed to obtain the loan |
• Higher interest rates and closing costs • Brewer = high risk, may not be able to apply |
| Commercial Real Estate Loans | Long-Term | • No rinsing leases, you own the building • No fear of building owner selling from under you |
• Large amount of cash required • Responsible for all maintenance, insurance, taxes on building |
About On Tap Credit Union
On Tap Credit Union celebrates its history in the brewery industry. Originally founded in the basement of a brewery for uniform and car loans, On Tap has continued to support the industry by crafting specialized financial solutions for breweries and their employees. Thinking about opening your own brewery or taproom or just want to learn more? Visit ontapcu.org or call 303.279.6414 to schedule a consultation.