SBA 504 Brewery, Winery and Distillery Feasibility Study in Minnesota

Minnesota places third nationally for 504 lending to makers of beer, wine and spirits when loans are counted, though the class holds only the tenth spot of 39 inside the state. Thirty-five is the count in the cell, its $21.5 million spread around a $438,000 median that is 0.71x the national 504 beverage-maker figure, with half of loans between $224,000 and $688,000. Not a single loan was franchised. Cancelled approvals are at least 6.5% through FY2024, and rise to 9.7% if undisbursed loans are counted, a mild spread.

Four development companies

The lender table has four entries. By loan count Midwest Business Finance Corporation is first (13 loans, $5.3 million). Twin Cities-Metro Certified Development Company has 7 loans for $5.8 million, Amplio Economic Development Corporation 6 for $3.8 million, and Southeastern Minnesota 504 Development Corporation 5 for $3.2 million. The metro company has fewer loans than the first yet more dollars, so it handles larger projects. The tally records notes held and implies no judgement. Hennepin leads the counties with 7 loans, followed by Dakota with 4, Rice and Stearns with 3, and Nicollet, Ramsey and Washington with 2.

Years

Approvals were 4, 5 and 4 in FY2017 to FY2019, 6 in FY2020 and 7 in FY2021 at $4.7 million, then 2 in FY2022 and none in FY2023. FY2024 and FY2025 had 3 each, and FY2026 only 1 loan at $299,000. The decline after the FY2021 peak is a pattern a lender would want a study to explain.

What the code hides

What the industry code establishes is that the borrower produces alcohol. No code shows if a taproom, tasting room or event space exists, yet such space can supply much of a producer's income. Scope was set to brewers, vintners and distillers; other manufacturers are out. Charge-offs are unpublished for lack of aged loans.

Questions for a Minnesota producer

A study should separate production capacity from the taproom, because the two have different markets and licences. It should test barrel or tank capacity against realistic sales, distribution agreements, the share of income from on-site sales, and the seasonal pattern of a cold-weather state. Tanks and stills are costly and specialised, so valuation should set machinery apart from the building and show a price to a user with no interest in brewing. Federal and state licensing delays belong in the schedule.