SBA 7(a) Brewery, Winery and Distillery Feasibility Study in Massachusetts

Small producers, small loans

Massachusetts producers of beer, wine and spirits borrow far less through SBA 7(a) than their counterparts elsewhere. The median loan is $137,000, only 0.55x the nationwide 7(a) typical for beverage makers, and most loans sit from $65,000 to $350,000. SBA approved 91 loans totalling $30.4 million. The state is 13th among states by count, and the class ranks 12 of 39 inside Massachusetts. Not one loan carries a franchise tie, at 0.00%, so the record is of independent makers.

The class gathers breweries, wineries and distilleries under codes that say the borrower makes beer, wine or spirits. Nothing in the code reveals visitor business such as tastings or events, so the record cannot say whether a borrower welcomes the public, and a producer that sells mostly on site has a different risk from one that ships to distributors. Wineries are counted here alongside the other two.

Lenders and counties

Eastern Bank holds 20 loans worth $2.8 million, the largest book by count, with a small average. Manufacturers and Traders Trust Company holds 8 worth $1.8 million, and Coastal Heritage Bank holds 5 worth $2.7 million, a much higher average. This is SBA's list of who holds the loans, with no view on how anyone lends. Essex County has 16 loans, Middlesex and Worcester 13 each, Suffolk 12, Norfolk 11, Plymouth 10 and Hampden 5.

Approvals started at 16 in FY2017 and ran at 5 or 6 in FY2021, FY2024 and FY2026; FY2023 stands out with 8 loans worth $8.0 million. The cancellation floor on Massachusetts approvals made by FY2024 is 10.7%, or 12.0% counting undisbursed loans. Massachusetts's early cohort holds 45 loans, with charge-offs of 4.4% or more to date and 2.2% at five years. These are minimums, and only a small cohort stands behind them.

Points a Massachusetts producer study must cover

The study has to separate production from retail. Start with capacity and licences, then show how much of the revenue comes from wholesale, distribution and on-premises sales, since each depends on different things. Because the median loan is small, many borrowers are starting small, and the plan should show equipment cost against the output the equipment can actually deliver in a year. Rent or purchase of the building, zoning for production and for visitors, and the cost of inventory held while product ages belong in the budget. Show that the loan payment is covered when sales run below plan, and disclose the cost of any licence or permit that must be in place before the first sale.