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SBA loan - has anyone done one?

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  • SBA loan - has anyone done one?

    All,

    I have an established 3 year old 7bbl brewery and am looking to move into a larger space to grow our operation. Part of that is going to be financed through an SBA loan (hopefully).

    My question is for people who have gone that route before. They sent me a spreadsheet which is extremely basic. They want me to fill out simple expense numbers for things like rent and utilities, and then income numbers like tap room pints and wholesale kegs. I filled it out, but the spreadsheet itself is absolute garbage. There's nothing industry specific about it and it feels like it's geared to someone opening a shoe store. Now they've come back and said they don't like my numbers, but I have no idea what the underwriters are thinking. I mean they never even asked how many bbls a year I'd be producing.

    Is this common? For folks who have done this before, how in-depth did you make the spreadsheet? Did you end up with a useful document for your business or was it just a one time projection for the SBA? I'd also like to ask if you had to put up any external collateral to secure the loan as they want me to put up my house, which I'm not to thrilled about.

    Thanks!

    Peter
    Populuxe Brewing
    Seattle, WA

  • #2
    Hi Peter,

    We went through this process a few years ago and did finally secure an SBA guaranteed loan to help finance an expansion. The process was lengthy and at times frustrating but in the end we did get the capital we needed at a fairly good rate. Keep in mind that you are going to be obtaining this loan from a bank, not directly from SBA. Not all banks have the same experience or specialize in making SBA loans. My recommendation would be to find a bank that does a lot of work with SBA and knows how to navigate the process. They should be able to help you with spreadsheets, paperwork, applications, etc. I already had a complete business plan with projections, so that was what we submitted. Depending on the type of loan you may be required to pledge significant collateral, like your house, which is what I ended up doing. Above all, find a banker who wants to work with you and knows SBA so you don't end up wasting time.

    Feel free to contact me directly if you have more questions.

    Good luck!
    Steve Sanderson
    RiverWalk Brewing Co.
    Newburyport, MA

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    • #3
      Find a Preferred SBA Lender

      We just recently went through this and my best piece of advice is to find a local (not a national bank) lender that is an SBA preferred bank. What that means is that the bank has done enough loans with backing from the SBA that they can underwrite the loan on their own and simply submit it to the SBA without additional underwriting from the SBA. We are a start up as well, so no financials, but we presented the bank with a very detailed set of projected financials and business plan, had to raise the same amount of cash as the loan (50/50 debt to equity) and not only had to sign leans on our homes, but basically any asset that the bank thought had any value at all. The SBA will almost always require liens on personal assets, personal guarantees, life insurance to cover the loan value and the blood of your first child (that last one was optional, but we didn't want to take chances). With you already being in business, you should be keeping some pretty detailed information on your total production, sales, etc., at a minimum for your TTB reporting, and that info can be put into a financial model that should show profits, losses, and be able to produce a balance sheet, all of which we had to provide the bank. If you have any accountant friends or customers, reach out and ask them to help you put together a balance sheet for all three years of operations. Without detailed accounting data to show that you're making money steadily and will be able to cover the loan payments, banks are going to be nervous. And if you find a preferred lender, that's who you'll have to satisfy. And just as an additional caution, the banks don't look at the SBA's guarantee very positively. The SBA makes it very difficult for a bank to recover funds when there is a default, so they treat it like there is no guarantee. PM me if you'd like more info on the process.

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      • #4
        Thanks for the responses, all good points. I have sent them the P&L, our business plan, production numbers and in-house projections, all of which seemed to take a back seat to this spreadsheet they wanted filled out. I still don't have a good feeling about my banker and his ability to understand our position, and the amount of the loan keeps shrinking...

        Oh well, next up they'll be sending the appraiser to my house and then to the brewery to look at my current equipment. We'll see how that goes.

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        • #5
          Originally posted by populuxe View Post
          Thanks for the responses, all good points. I have sent them the P&L, our business plan, production numbers and in-house projections, all of which seemed to take a back seat to this spreadsheet they wanted filled out. I still don't have a good feeling about my banker and his ability to understand our position, and the amount of the loan keeps shrinking...

          Oh well, next up they'll be sending the appraiser to my house and then to the brewery to look at my current equipment. We'll see how that goes.
          I remember this on our SBA-backed loan. Brewers think in barrels; bankers think in dollars.

          Good luck!
          Barbara
          Anaheim Brewery

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