Issue link: http://winesandvines.uberflip.com/i/562166
September 2015 WINES&VINES 47 FINANCE our customers in a way we don't get to now." The winery will be the new home for the Le Mistral label, founded by Joseph Phelps, and will launch the Folktale label with a 2013 vin- tage Monterey County Chardonnay and Mon- terey County Pinot Noir. A Talking Animals sub-brand launch is planned for next spring. "Folktale is inspired by the idea that the story is what sells wine," Ahn said. "Getting to tell that story will change the way we do business." "We see growers who have traditionally produced grapes to fill bulk contracts seek to add value to their business by creating a winery component," Grant said. "Direct to consumer is a way to control their own destiny, and own- ing their facilities and equipment controls oc- cupancy costs." An SBA 504 loan can be used to buy, build or improve owner-occupied commercial real estate or other fixed assets such as equipment. Interest is at below-market rates, fixed and fully amortized over the 20-year loan term. SBA 504 loans typically have three partici- pants: A bank provides a first mortgage for 50% of the total project cost; the small-business owner contributes as little as 10%, and a certi- fied development company provides the SBA loan for the remainder, up to 40% of the total project cost. The SBA portion of the loan can be up to $5 million ($5.5 million for manufac- turing or energy-efficient projects), but there is no maximum on the total project cost. The owners of Jessup Cellars in Yountville, Calif., financed their Napa winery in 2007 and a separate Yountville tasting room in 2010 with the SBA 504 program. "We were one of the first standalone tasting rooms in Napa," Jessup Cellars partner Roy Eisiminger said. "Conven- tional wisdom had it that you had to have an on-site winery, but we proved that wrong." Eisiminger said owning, rather than leasing, the property made good business sense. "With property in the (Napa) Valley at a premium, we're building equity fast," he said. Frank Léal of Léal Vineyards used SBA 504 loans to diversify his wine country property portfolio in Hollister, Calif. In 2013 he added The Grove Restaurant, specializing in farm-to- table Central Coast cuisine, which has become a culinary destination in its own right. "Because I only had to come up with 10% down," Léal said, "I was able to afford to bring in a heavy- hitter chef" who helped the restaurant take off. In 2014 he added a bed and breakfast. "Every year, I grow financially," Léal said. "The 504 program makes sense for wineries and vineyards because they can be hard to fi- nance conventionally," Grant said. "But for any business, wine-related or not, that is interested in owning its building and equipment, this is an attractive way to go. Being able to control your occupancy costs, which for most busi- nesses is the second-largest expense after labor, can make a big difference in your cash flow. For cyclical, luxury businesses, that can mean survival when boom turns to bust." Korrine Skinner is a San Francisco Bay Area writer who currently manages communications for TMC Financing. TMC is a nonprofit 501(c)4 organization with the mission of bettering Northern California and Nevada communi- ties by fueling the success of small businesses. FINANCIAL SERVICES/BANKING/LEASING SUPPLIERS American AgCredit (800) 800-4865 agloan.com AXA Equitable Finance (209) 471-3622 axa-equitable.com Bacchus Capital Management (415) 828-8898 bacchuswinefund.com Bank of America (707) 293-2553 bankofamerica.com Bank of Marin (707) 265-2001 bankofmarin.com Bank of the West (707) 501-5150 bankofthewest.com BMO Harris Bank (415) 354-7510 bmoharris.com/wine Comerica Bank (415) 477-3277 comerica.com Exchange Bank (707) 541-1455 exchangebank.com Farm Credit West (800) 909-5050 farmcreditwest.com First Republic Bank (415) 392-1400 firstrepublic.com H&A Financing and Services Corp. (707) 523-1112 hafinancing.com Hansel Leasing (707) 544-2822 hanselleasing.com Hibernia Business Solutions (925) 356-1386 hibernialeasing.com John Hancock Financial Network (916) 922-4211 johnhancockfinancialnet- work.com KeyBank National Association (216) 471-2706 keybank.com Liquid Trade Solutions (707) 252-7607 liquidtradesolutions.com Live Oak Bank (707) 921-1102 liveoakbank.com/wcb Matthews, Panariello PC (201) 543-2025 mpcpas.com Mechanics Bank (707) 256-4343 mechanicsbank.com MetLife Agricultural Investments (559) 435-0206 metlife.com/ag Mission Capital (707) 431-2678 missioncapitalfund.com PricewaterhouseCoopers LLP (415) 498-7446 pwc.com Prudential Agricultural Investments (916) 789-4071 www3.prudential.com/ businesscenter/realestate/ pmcc Rabobank NA (707) 545-6887 rabobankamerica.com Silicon Valley Bank, Wine Division (707) 967-1367 svb.com Umpqua Bank (707) 252-5020 umpquabank.com Union Bank (707) 968-9514 unionbank.com US Bank (925) 256-3870 usbank.com Wells Fargo Wine, Food & Beverage Group (707) 584-3150 wellsfargo.com WOW Logistics (920) 830-4804 wowlogistics.com For more information about the suppliers listed above, visit winesandvines.com/buyersguide or see Wines & Vines' 2015 Buyer's Guide. FINANCING COMPARISON CHART SBA 504 SBA 7(a) Conventional Down payment 10% minimum 10%-15% minimum 25%-40% Interest rates SBA second mortgage at below-market rates; fixed for 20 years Typically variable; tied to prime Varies by lender Fees Included in SBA loan; approximately 2.65% Paid out of pocket; 2%-3.75% Paid out of pocket; approximately 1% Project size No maximum Maximum loan amount: $5 million No maximum Collateral No additional collateral required Additional collateral typically required for 90% financing Typically no additional collateral required Prepayment penalty? Yes, for first 10 years, starting at 3%, then declining each year Yes, typically in first three years, starting at 5% Varies by lender