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64 P R A C T I C A L W I N E R Y & V I N E YA R D April 2015 W I N E B U S I N E S S Tawnya Lancaster BY SBA loan through a credit union F or small wineries, the road to suc- cess is rarely paved in gold. This is especially true as the United States recovers from a recession and a drought plagues much of the West, both of which have made it more chal- lenging than ever for winemakers, grow- ers and other agribusinesses to obtain access to the capital they need. New regulations on the banking industry have driven many financial institutions to tighten their qualifica- tion requirements for a small business loan, and many have stopped lending altogether to small businesses in wine and agriculture. Other financial institu- tions have moved upstream and are only focusing on businesses with "A credit." The institutions that are lending typi- cally prefer to finance established brands with proven track records, leaving small and emerging wineries at a disadvan- tage. Add to this the effects of severe drought, which is giving lenders the jitters over loans for businesses that rely on water, and it may seem almost impos- sible to obtain funding. Options for financing— think SBA and think local There are other options, though, such as seeking a Small Business Administration (SBA) loan through a non-traditional commercial lender, such as a credit union. The requirements for SBA loans are generally more flexible, and they are offered to a wider range of businesses. A community or regional credit union can be more flexible with regard to loan approval and the structure of the loan due to local decision-making. Joe Anzalone, chief banking officer for SBA-preferred lender Technology Credit Union (Tech CU), says, "The SBA has made several changes in 2014 that have helped streamline the application process and speed loan approvals. They are giving local financial institutions more flexibility with things like the pre- ferred lender program (PLP). Preferred lenders have final credit decision on loan applications. You can imagine how this shortens the time from application submittal to approval." For young wineries that need capital to expand— like Sera Fina Cellars, opened in 2010 by founding winemaker Paul Scotto — a local SBA lender can be a very real solution. Family success in wine business helps win loan approval Sera Fina Cellars is located in Amador County, Calif., approximately 40 miles east of Sacramento in the Sierra Nevada foothills, at an elevation of 700 feet. The majority of Amador's 40 wineries are located in the northern part of the county, in Shenandoah Valley. Sera Fina is among what is known as the five "West End Wineries," located off Highway 16, five minutes south- west of Plymouth. The other West End Wineries include Nua Dair Vineyards, Tanis Vineyards Winery, Convergence Vineyards and Drytown Cellars. A self- proclaimed "first-generation winery from a fifth-generation family," Sera Fina produces a variety of Italian and Rhône- style wines. Scotto bottled his first Sera Fina vin- tage in 2006. Made with 2004 Zinfandel grapes purchased from an El Dorado County grower, the wine sat in unla- beled bottles until Scotto came upon the winery's current location and officially opened the doors in 2010. Four years later, Sera Fina is growing and becoming known for "casual wines that people like to drink and share," which include an eclectic array of reds and whites. "From a business perspective, I focus on the broader marketplace, like the Midwest, where familiar varieties are much more popular," says Scotto. "But SERA FINA CELLARS I also want to sell wine in the tasting room that is a little more unique, some- thing people cannot obtain anywhere else. Everything we produce, though, is infused with our philosophy of just relaxing and enjoying the wine." Scotto's desire to make wines that peo- ple drink casually can be traced back to his family's heritage (which was one of the things that impressed Tech CU when Scotto applied for his SBA loan). His grandfather, Anthony Scotto Sr., was the founder of Villa Armando, which is one of the oldest wine brands in the United States. The Villa Armando brand is known for its Vino Rustico Red jug wine (4 liter, 1.5 liter and 750ml packaging), which has filled more than 2 million glasses. The Pleasanton, Calif., winery was closed in the 1980s, but the Scotto family has kept the brand alive through a cult following among Italian Americans. In 2013, they celebrated the 50th harvest in California. "My grandfather made wine that peo- ple enjoyed," explains Scotto. "It may not have been the best for his palette, but it was what people wanted to put on the table. That is one of the main reasons Vino Rustico has been such a long-stand- ing brand." Four-year-old Barbera vines at Sera Fina Cellars almost ready for harvest.