Announcement

Collapse
No announcement yet.

SBA 7a Loan and Brewer's Notice Approval / State License Approval

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • SBA 7a Loan and Brewer's Notice Approval / State License Approval

    Hi,

    I have a bank suggesting that we will need to have our Brewer's Notice approved and our CA Type 23 Alcohol License in place before we can get a SBA 7a loan. Has anyone else run into this?

    Much appreciated.

    Brian

  • #2
    Strength in documents

    Your lending officer is asking for these things because it shows that you are going to use the money for exactly what you are asking for. Also, the more business documents that the bank can submit to the Feds on your behalf the stronger the application is and the request becomes. The bank wants to do business with you and get you on the hook for anything they can while covering their own butts by getting a SBA 7a loan. If you have adequate collateral you can ask the bank to consider a SBA Express Loan. You still have to meet bank criteria first, but the Express Loan usually takes two days to get thumbs up or thumbs down on and typically only covers about 50% of the requested amount and limits the amount loaned to $25k. If you have a good relationship with the bank ask them if this is an option rather than the 7a loan if you are needing less than $25k.
    Last edited by S.Foster; 02-20-2015, 04:06 PM.

    Comment


    • #3
      This is not my area of expertise but the SBA 504 is very popular for brewery projects. You can also wrap operating capital into the loan.

      Comment


      • #4
        This is a bank requirement, not an SBA requirement (in my opinion). While it makes sense for the bank to require these are in place, they are not required on my SBA 7a loans I am closing on. I have found that many banks will overstate their underwriting covenants as SBA requirements to prevent their prospective customers from pushing back on loan requirements.

        Knowing the TTB backlog and delays on approval, I'd ask the bank to make this a funding requirement, not an approval requirement. This way you can work the loan and TTB in parallel, saving 4-5 months. You may need to make them understand that the TTB approval is fairly automatic within the stated federal requirements.

        Randy

        Comment


        • #5
          Thanks All. Yeah it seemed like a chicken before the egg problem. It was my understanding that for most brewery start-ups, as soon as they get their brewer's notice they are off and brewing, not ordering equipment, or building out their space, etc. In other words, the brewers notice is one of the last items to be received / completed. So if that is the case, what else would the loan be used for? Anyway, I was a bit thrown by that, but it sounds like it is just the bank protecting themselves against risk, and there may be some flexibility involved.

          Comment


          • #6
            Originally posted by BeerBred View Post
            This is not my area of expertise but the SBA 504 is very popular for brewery projects. You can also wrap operating capital into the loan.

            504 cannot be used for working capital - 7a is more of a general loan and I believe you can borrow funds for working capital. In my previous life I worked with 504 loans - and hope to be a first time borrower soon


            Brian

            Comment


            • #7
              Originally posted by briangaylor View Post
              504 cannot be used for working capital - 7a is more of a general loan and I believe you can borrow funds for working capital. In my previous life I worked with 504 loans - and hope to be a first time borrower soon


              Brian
              I stand corrected. The 504 DOES NOT allow for working capital.

              Comment

              Working...
              X