Brewery Funding for Equipment, Inventory and Growth

Why breweries run a long cash cycle

Cash goes out for ingredients and brewing weeks before beer is poured or shipped. Distributor payments and keg returns stretch the wait further.

A batch has to ferment, condition and be packaged before it earns anything. Taproom sales bring cash quickly, while wholesale sales to distributors and retailers pay on terms. Seasonal beers need an early bet on demand.

Equipment is the other major cost. Fermenters, brite tanks, kegs and canning lines are long-lived but expensive, and many are bought in stages as production grows.

Cash tends to swing with the calendar: summer patios fill, winter is slower, and holidays move packaged beer. Plan for both ends of that range.

What brewery owners fund

Common uses are fermentation capacity, packaging lines, kegs, taproom upgrades, raw materials and distribution trucks.

• Production equipment. Fermenters, brite tanks, chillers and a canning line through equipment financing.
• Inventory. Grain, hops, cans and kegs bought ahead of a season.
• Taproom. Patio, bar, kitchen or event space.
• Distribution. A delivery vehicle, cold storage and sales reps.

Licensing and compliance with federal and state alcohol rules are your responsibility. Check with the TTB and your state authority.

Many owners also fund glassware, merchandise and event programming, since a busy taproom with food trucks and trivia nights lifts per-visit spending without adding production costs.

A payback example

Calculate extra barrels sold per month, the margin on each, and compare the result with the monthly funding cost.

This is an illustrative example. A brewery spends $70,000 on two larger fermenters and a keg-washing system. The added capacity lets it produce an estimated 60 more barrels a month, earning about $6,500 a month in added gross profit. A funding cost of $3,000 a month equivalent leaves about $3,500 a month, provided the beer sells.

Sales are the unknown, so ROI Funder encourages owners to check demand, such as signed distributor commitments, before buying capacity.

Which products fit

Equipment financing fits tanks and lines, while working capital and lines of credit fit ingredient and packaging costs.

A line of credit works for repeated ingredient purchases. Equipment financing keeps cost tied to the asset and often takes 2 to 7 days. For larger expansions with a clear plan, compare a term loan with fixed payments or an SBA loan.

Matching production growth to real demand

Capacity only pays when beer sells, so confirm demand before adding tanks.

Look at your last twelve months. How often did you run out of a core beer? Did you turn away wholesale orders? Those are signs capacity is the limit. If instead you are discounting kegs to move product, a bigger tank will not solve it.

Consider the whole chain. More fermentation space needs more cold storage, packaging time, labor and sales effort. Add up those costs, not just the equipment price. If you plan to self-distribute, factor in a delivery vehicle, fuel and a person who calls on accounts.

Also think about timing. Beer ordered in spring for summer sales requires cash weeks earlier, and a line of credit can cover that gap while the taproom and wholesale income catch up. Keep your excise and sales tax filings current, since arrears can complicate any funding review.

What funders look for

Funders review consistent deposits, 6+ months in business, $20,000+ monthly revenue and 500+ FICO.

Bring a clear picture of taproom versus wholesale revenue. A complete file is the application plus three months of business bank statements. Approved, complete files can fund the same business day. Some funders are more cautious with alcohol businesses, which is one reason matching a file to the right funder matters.

The application takes a few minutes with a soft credit pull. Apply online.