Fundraising
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As I said, starting a brewery is also really expensive. You are going to have to pay to transform your location into a brewery (unless you’re moving into a turnkey operation), buy brewing equipment, pay a lawyer (or 2 or 3), pay state licensing fees (TTB doesn’t typically charge fees), pay for your a security deposit and rent, and eventually buy brewing ingredients.Here are the main sources of funding for breweries:
- Private investors – Money from friends and family is the most common source of funds for an upstart brewery. Taking on equity partners has consequences, though. TTB and your state liquor authority likely require disclosures and cooperation from your potential partners. Plus, investors are likely going to take an active role in your business, and want to know what you are doing with their money.
- Bank loans – This is a popular option for breweries. On the plus side, a bank won’t be sitting in on your planning meetings, and won’t be weighing in on your major decisions. On the minus side, you’ll be taking on another monthly expense taking away from your bottom line. SBA loans are a popular option, so talk to your favorite local bank to find out their best rate. Then shop that rate around to at least a few other banks, and choose the best option. A bank is almost certainly to ask a brewery’s owners personally back the loan, in case the business goes under.
- Retirement Funding – You may have an opportunity to use your retirement contributions to fund your brewery. That is only an option for companies that are organization as C-Corporations, and you can essentially use your retirement funds to invest in yourself.
- Private Equity Funding – Venture capital firms have taken an interest in breweries, and may be an alternative to banks. VC loans usually have a higher interest rate, but might be an option where you are not making headway getting approved for a bank loan.
