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  • Avenues for Capital Investment

    We are in the midst of our business plan, working toward getting financial items so we can properly project sales, costs, etc and I wanted to reach out to the community here on what are the best avenues for securing capital? I know home equity line of credit are a possibility, but where do you go to get the larger investments (i.e. for the equipment, etc)? I imagine a bank loan would be unfavorable from a terms standpoint, but please correct me if I am wrong. Any insight/advice/resources are greatly appreciated!

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  • #2
    Just realized I posted this in the "Sales" area. Can an admin please move it to the appropriate forum? Thanks!

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    • #3
      As much as I loathe banks entirely, I'm not sure how you beat the terms if you're financing. SBA loan you will pay a point or two over prime. They will require 25-30% down even though their website says 10%. They will also over-collateralize you. Most leasing programs are scams. Read the fine print carefully. If they tell you that you can buy the stuff at a residual value of $1 after 5 years or whatever, watch out. I've heard horror stories. You won't get more than 150 from any of them anyway, and likely not that much. The SBA or anyone else for that matter will want a rock solid business plan. Does anyone in your outfit know the beer business? It's very competitive these days as everyone here will tell you. What makes you think your plan will sell any amount of beer worth measuring? Be carfeful what you wish for.

      Best wishes

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      • #4
        Originally posted by BeerBred View Post
        As much as I loathe banks entirely, I'm not sure how you beat the terms if you're financing. SBA loan you will pay a point or two over prime. They will require 25-30% down even though their website says 10%. They will also over-collateralize you. Most leasing programs are scams. Read the fine print carefully. If they tell you that you can buy the stuff at a residual value of $1 after 5 years or whatever, watch out. I've heard horror stories. You won't get more than 150 from any of them anyway, and likely not that much. The SBA or anyone else for that matter will want a rock solid business plan. Does anyone in your outfit know the beer business? It's very competitive these days as everyone here will tell you. What makes you think your plan will sell any amount of beer worth measuring? Be carfeful what you wish for.

        Best wishes
        So with a loan of let's say 700k, they'll require 25-30% of that down? Or do you mean on the leasing equipment part?

        The three of us are all finance backgrounds, although I did work for a distributor for some time years ago. I also have connections at some distributors that can help with answering some of my questions.

        Our plan is still in infancy, so there are a lot of unanswered questions. I know the importance of making sure the business plan is rock solid. I find that setting yourself apart from the rest is one of the more challenging aspects of this plan. Even with being in GA and having very few breweries in comparison to other parts of the country.

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        • #5
          The vast majority of our funding will be from a SBA loan, unfortunately. We will likely pull from home equity and 401k loans, but that will only get us so far. I read today that BrewDogs has had something like 56,000 investors from crowdfunding. That was quite interesting.

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          • #6
            While i don't know much about those Brew Dogs, i have a very distasteful image of them. I find them repulsive and an insult to this business. Also, they are (I'm reluctant to say this) somewhat of a global thing. You are not going to raise anything via crowd-funding. They can because they have a market.

            If you need a million and you can put 250 down and you can over-collateralize with your homes or other assets, you should have no problem getting an SBA. They will happily come take your stuff if you default. The leasing, there is no company that will give you a lease on any significant amount of money without 2 years of black financials.

            You may have an edge in Georgia, but the East coast... Man you're 5 years late at least. Unless you have a bomb no one else has. But i don't know a damn thing about this business.

            Maybe you should buy one that's selling, that is starting to happen frequently. Or invest in someone with a killer plan...

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            • #7
              Originally posted by BeerBred View Post
              While i don't know much about those Brew Dogs, i have a very distasteful image of them. I find them repulsive and an insult to this business. Also, they are (I'm reluctant to say this) somewhat of a global thing. You are not going to raise anything via crowd-funding. They can because they have a market.

              If you need a million and you can put 250 down and you can over-collateralize with your homes or other assets, you should have no problem getting an SBA. They will happily come take your stuff if you default. The leasing, there is no company that will give you a lease on any significant amount of money without 2 years of black financials.

              You may have an edge in Georgia, but the East coast... Man you're 5 years late at least. Unless you have a bomb no one else has. But i don't know a damn thing about this business.

              Maybe you should buy one that's selling, that is starting to happen frequently. Or invest in someone with a killer plan...
              For sure, I imagine the 56000 was purely due to their scale and global presence. Just thought it was interesting, the whole crowdfunding deal.

              I'm confused on the "5 years late". Are all breweries opening now at a severe disadvantage? I see lots of new ones popping up with seemingly good success. Just curious about your insight there.

              The funding is the scariest part, in my opinion. We're at the stage now where we're gathering information, so this is all very helpful.

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