Working to grow your bar, brewery or distillery business and don’t quite have enough cash on hand to do so? If your business bank account has seen better days or you simply want to avoid tapping into your cash reserves for a costly or unexpected expense, consider how a business loan for a bar can help.
Financing Your Bar
As a bar or brewery owner, you know that drinking establishments, like any business, have a fair share of challenges. Whether you want a boost in working capital for your microbrewery, new equipment for your craft beer taproom or an additional location to increase business, there are bar and brewery financing options to meet your needs. Let’s look at a few instances of when brewing industry financing for your business can be optimal.
Upgrade Bar or Brewery Equipment
Need new equipment for your bar or back office? You might consider bar or brewery equipment financing when you’re seeking to update your out-of-date appliances or computer systems. Whether you’re looking to buy a beer fermenter, lighted signs, liquor shelves or a point-of-sale system, there’s a bar or brewery business loan to meet your needs. Additional items you might use financing to purchase include:
- Brewing tanks
- Filtration systems
- Carbonation systems
- Ice machines
- Underbar sinks
- Liquor dispensers
- Glass holding racks
- Bar stools
Update Your Bar
Remember the ’80s TV show “Cheers”? The place “…where everybody knows your name, and they’re always glad you came.” You might want that to be your bar, but you don’t necessarily want the pub’s outdated decor. Your bar was pristine a few decades ago, but a facelift could do it some good. If you’re looking to upgrade your building’s interior or exterior to feel more 2020, consider how getting a loan for your bar can help.
Bar and brewery financing can also give you a cash flow boost when you need to stock the inventory that your business relies on for success. Extra funds can help you purchase costly food and beverage essentials in bulk, including:
Invest in Music and Entertainment
Is your business a sports bar? Do you want to buy new TVs and sound equipment to draw in more crowds? Or would you like to have the funds you need to hire local musicians to perform at your bar? Get more people talking about your place as the go-to watering hole by featuring high-quality electronics or talented performers.
Maybe your existing drinking establishment is doing so well you’d like to acquire another location to cater to additional clientele. If you have your eye on leasing or purchasing a space to continue growing, consider the funding you’ll need to get there. Bar and brewery finance options are also available to offset the initial costs involved in opening another location, such as building renovations and business licenses.
How Much Can My Business Qualify For?
Best Brewery Finance and Loan Options
Take a look at these small business loans for your brewery or tavern, and see which one’s right for you.
Loans guaranteed by the Small Business Administration (SBA) offer some of the most competitive repayment terms and interest rates. If your funding needs are under a few hundred thousand dollars and you need access to cash within a month or so, consider an SBA Express loan. This type of SBA loan could be funded in 30 days. Repayment terms are 5 or 10 years, and the maximum loan amount is $350,000.
Lenders who partner with the SBA to provide these loans also offer what’s referred to as the standard SBA 7(a) loan. An approved applicant can borrow up to $5 million, and repayment terms range from a maximum of 10 years for working capital and 25 years for commercial real estate.
If your craft brewery or bar is in need of one-time funds, consider a term loan, which often has repayment terms of 1-5 years. Typically, funds can be used for any purchase, and depending on the lender, loan amount, annual revenue and your creditworthiness, you could get funding for up to $500,000. You can pay off your balance by making daily, weekly or monthly payments, depending on your terms.
Whether you’re interested in an equipment lease or purchase, consider brewery equipment financing. This type of funding lets you acquire the tools, machinery and systems that your business needs. With an equipment loan, the equipment typically serves as collateral for the loan. This means if you cannot repay your debt, your lender hedges its losses by taking back the equipment. Equipment financing repayment terms generally don’t exceed the useful life of the equipment, and can range from 1-5 years.
Business Lines of Credit
A business line of credit is another option if you’re wondering how to get a loan for a bar. This type of financing is similar to a credit card. How? A lender approves you for a certain credit line, which you have access to when you need it. You’re under no obligation to use the funds, and pay interest only on the amount you borrow.
Also, with most business lines of credit, as you pay back your borrowed amount, your credit line increases accordingly, up to your original limit. You might find business lines of credit with $500,000 credit limits, and 6 months to several years repayment terms.
Merchant Cash Advances
A merchant cash advance is a funding option that provides you with access to cash based on your business’s future sales or revenue. Merchant cash advances are a great alternative if your credit score is in the low 500s and you need fast access to cash.
In many cases, you can receive funding in as quick as 1 day, with repayment terms ranging from a few months to over a year. With this type of funding, you either pay back your advance plus lender fees daily or weekly. Payments can be fixed, or they can vary, with payback amounts based on how much money your business brings in.
Where to Find Brewery Loans
Conventional banks and credit unions might be the first types of lenders that come to mind when you’re searching for how to get a loan for your bar. However, when it comes to brewery finance options, you might also consider non-traditional lenders.
While conventional banks and credit unions offer competitive rates and repayment terms, small business loans can be challenging to obtain. If you’re a bar owner, you may have to undergo a lengthy application process and provide paperwork, such as:
- Business plan
- Tax returns
- Profit-and-loss statements
- Bank statements
Banks will also likely consider include your credit score, time in business, cash flow and collateral. Additionally, the funding process can take time.
In contrast, non-bank or alternative lenders’ application requirements are less stringent and you’ll have fast access to funds — sometimes in as soon as 1 day. Some borrowers find the benefit of overnight funding outweighs what could be higher interest rates and shorter repayment terms.