Alternative Financing Options For Micro & Craft Breweries
Starting or expanding a business can be an exciting time for an owner. It can also be stressful as an individual pours over finances and crunches the numbers. A craft brewery has unique needs when it comes to equipment and working capital. Instead of pursuing funding through traditional channels, such as banks, the owner of a brewery should consider exploring alternative financing options with International Funding Group. Here are 4 great Brewery Finance methods that can provide sound solutions for growth.
Adequate cash flow is often the single most important component that determines the success or failure of a business. The brewing business is particularly capital intensive and puts a strain on cash flow, as money must be advanced for equipment, supplies, kegs, transportation, etc. Once the beer has been sold, distributors can take in excess of 30 days to pay the manufacture, which often stifles the growth of a budding brewery. Factoring your receivables can assist the business in turning invoices into cash today. We can advance up to 80% of an invoice as soon as the invoice is issued. This enables the business to redeploy that cash to fund growth. We have factoring agreements, which are non-recourse, which means if we purchase an invoice from your company and the payee defaults you are not responsible for the payment. IFG has the resources to help your brewery reach its financial objectives.
Brewing equipment can come with a hefty price tag. Brew houses, stations, kettles, and tanks are all necessary components to creating quality product. Many business owners cannot afford the large upfront costs that come along with purchasing these items. What’s more, technology in brewing is always changing, and being tied into machinery for a long period of time can mean missing out on upgrades.
Equipment leasing is a form of alternative financing that gives brewers the option of paying a small amount of money each month for the length of a lease instead of paying a substantial amount of money. At the end of the lease term, a business owner can simply turn in the old equipment and upgrade to newer models, keeping them on the cutting edge of technology, or take advantage of the low buyout option and keep the equipment. Leasing has many advantages over purchasing outright, including possible Tax advantages – consult your tax professional for more information.
Having an unsecured business line of credit is advantageous for any business, especially a brewer. International Funding Group has alternative financing structures that can provide lines of credit to help an owner cover unexpected costs or everyday purchases. For start-up companies or establishments that lack a proven track record of revenue, these lines of credit are especially helpful and easier to obtain than traditional business loans. Choosing this method of finance, helps separate Personal and Business credit and helps establish and strengthen both.
Craft breweries typically start small and then expand by leaps and bounds. To fund that growth, alternative financing methods such as leasing equipment or securing a line of credit can be extremely helpful.
There are a number of commercial financing options available to brewers. Among them is purchase order financing, which funds purchase orders to provide cash for the business to acquire the materials needed to complete a customer’s order. Purchase order financing for Craft brewers also allows a brewery to acquire and complete larger orders without having to wait on the purchase order to be paid in full.