Positve Experiences with Bank loans

[nick79brew]

From all the research I've done it has become apparent that bank loans for start up brew pubs are very hard to aquire. However I'm sure that there are pubs out there who have been sucessful secureing loans. I will be able to put 30-40% down on a loan and have over 10 years experience in the industry. Is there anyone out there with POSTIVE experiences in dealing with banks? Any advise will be much appreciated.
Nick

[Butcher Scott]

Nick, I've talked with several banks for my start up, and if you have a solid business plan, industry experience and 30-40% capital injection, you should have no problem. The most stringent requirements I've run into so far have been 33% capital injection. I've found a newer bank that is more agressive in trying to secure business, and they are willing to do it for 20-25%.

[BeersmithMT]

When we opened 8 years ago, we were able to get an SBA loan through our local bank for our start-up costs. This was in the middle of the micro-brewery shakeout of the late 90's, and several of the banks we talked to were not interested at all. We are not truly a pub, rather a microbrewery with a tap room. We had existing capital (some equipment) in the 20% range, and very little industry experience. We had a good business plan and all of the owners at least had good day jobs. We did have to sign personal guarantees (which seems to be the rule anymore). I still remember thanking the loan officer for taking a chance on us and he said "Well you're going to pay it back, aren't ya?" Maybe that's the difference of dealing with a local bank in a small town. Eight years later and we are debt free (except for the equipment we just bought for a new brewery). Anyway, it's not really that this story will be helpful to you, but just a reminder that positive things can and do happen. I think convincing your banker that you have a reasonabale business plan and are personally committed to success is key. Good luck!

[Greenbrewmonkey]

Hello Nick,

My experience is very eerily similar to Brian's. I have a small microbrewery with a small retail area (no pub), and over 90% of my beer sold wholesale. After several banks turned me down, I was able to find a smaller local bank willing to go through the SBA process with me. I had a nice (I think) business plan, a little less than 20% of the capital, and nine years brewing and industry experience. And a personal guarantee, of course.

Although it seemed a little daunting at the time, after the last three years, trust me, the loan is the easy part!

Cheers,
Ron
Jolly Pumpkin Artisan Ales

[nick79brew]

thank you all for the replys....just what i needed to boost my energy while completeing my business plan!
nick

[tsewong73]

Howdy,
To be honest, the experience I've had so far with trying to secure a loan has been very smooth. We're going through a local bank that deals with SBA loans. The loan officer I'm dealing with has been wonderful. She has helped us develop our cash flow statements, sales projections and a few other things in order to make the best "case" possible for loan approval. She's really trying to make this work out for us. Now, we haven't been approved yet, and we're waiting until we have all of our limited partnership funds in place before we finalize our application. But our chances are very good because of the help we've gotten from our friendly loan officer.

We got kind of an early start - before we even secured our first limited partners - so our process has been going along rather slowly. And that's fine. It might be a good idea for you, while you're developing your business plan, to set up a meeting with a few banks in your area, particularly ones affiliated with SBA, and simply ask them what you can do to put your best foot forward. Since we've started, we've developed a great relationship with our loan officer. We've given her beer, and she's loaned us books on tape for some road trips.

Just be prepared to hike up your pants and do three years worth of cash flow statements, sales projections, income statements and maybe some balance sheets. They're all a pain in the ass, especially since they're all speculative, but it gives them (and you) a better understanding about how your financial situation might evolve as you go through your first couple of years. I don't think they're too concerned with specific numbers, but they want to see how those numbers change from month to month and how buying new equipment, hiring a new employee or simply increasing your grain purchase to cover a holiday boom will effect your income and, more importantly for them, your ability to make your loan payments.

Good luck, my brother. It seems like I'm just a few steps ahead of you in the process (except I'm starting a production craft brewery), so if you have any questions that I might be able to help you with, please feel free to send me a private message. Take it easy.

Tsewong

[Butcher Scott]

I should also mention that your local Small Business Development Center will be an invaluable resource in this process. Mine is actually helping me put together all the SBA loan documents, as well as talking to banks before I do to gauge their interest. All it's all FREE!