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46 WINES&VINES September 2015 FINANCE How Wineries Use SBA Loans Alcohol by Volume tapped SBA 504 financing to buy winery property in Carmel Valley By Korrine Skinner F inding the capital for expansion can be tough for smaller wineries, vineyards and wine-related businesses. Despite the wine industry's recovery back to pre-recession profitability, many banks shy away from complex, cyclical, commodity- driven businesses like wine. "Unless they have wine industry expertise and play regularly in that niche, banks tend to be wary of the risk and are either unwilling to loan or require a hefty down payment," ex- plained Rich Grant, executive vice president at TMC Financing, a non-profit, mission-based lender specializing in U.S. Small Business Ad- ministration 504 loans. "The real benefit of the SBA 504 program is the low down payment," Grant said. "For wineries and vineyards, the SBA requires 15% down; for other facilities like a tasting room or kitchen or wine-related businesses, the mini- mum down payment can be as low as 10%." Conventional financing, meanwhile, can re- quire a down payment of 35%—or even 50%. "On a multi-million dollar loan, that can be a big difference in capital available for other things, like staff salaries or marketing," Grant said. Greg Ahn, founder of Alcohol by Volume, a portfolio wine company ranked No. 251 on the Inc. 5000 list of the fastest growing private U.S. companies, leveraged the SBA 504 pro- gram to acquire a vineyard, winery, bottling plant, residences, land and equipment in Car- mel Valley, Calif. "It was a natural extension of our existing wine business," Ahn said. "Having the winery, vineyard, event venue and tasting room is a key piece of our business growth strategy. Direct to consumer is the fastest growing channel in the industry. We'll get to educate and interact with Folktale Winery & Vineyards and the Napa Valley tasting room of Jessup Cellars are two examples of wine companies using SBA loans to grow their businesses.