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

A mid-sized class with larger-than-usual tickets

Beverage producers are far from the biggest users of SBA 7(a) in Texas, sitting at 19 of 39 across Texas classes, yet the state ranks 7 among states for the program's brewery, winery and distillery loans by count. Texas recorded 137 such approvals through FY2017 to FY2026, adding up to $109.3 million. Texas producers borrow a median of $350,000, 1.40x the typical 7(a) loan to beverage makers across the country, and half of loans run from $186,000 to $947,300. Franchise ties are almost absent at 2.2% of loans, so these are overwhelmingly independent producers.

The industry codes behind this class tell us the borrower makes beer, wine or spirits. They do not reveal whether visitors are welcomed on site, through a taproom, tastings or events, and that side of the business can account for a large share of revenue and of building cost. Wineries are grouped here with breweries and distilleries. A study must therefore describe the actual operating model, since a production-only facility and a visitor destination have different customers, zoning and risk.

Lenders, counties and the long run

Live Oak Banking Company and Prosperity Bank each hold 12 of the loans, though Live Oak's come to $16.0 million and Prosperity's to $5.4 million. VeraBank National Association holds 7 worth $6.6 million, while Frost Bank and PeopleFund hold 6 each, worth $1.6 million and $1.1 million. SBA's records show holdings and do not describe lending standards. Harris and Travis Counties have 16 loans each, Bexar 15, Dallas 11, and Williamson 9, with Hays and Gillespie, wine and brewing country, at 7 and 6. Yearly approvals have fallen from 22 in FY2017 to 7 in FY2024 and 8 in FY2026.

Cancellation among Texas beverage-maker loans approved through FY2024 has a floor of 5.9%, and the ceiling is identical. Among the 84 loans in the Texas producers' early cohort, charge-offs total 3.6% or more so far, and 1.2% occurred within five years of approval. Treat each as a lower bound, since some of these loans remain open.

Underwriting tests for a Texas producer

Production capacity is the first test: barrel, tank or still capacity, the licences needed to sell on site and to distribute, and the cost of the equipment, which dominates the budget and has a narrow resale market. The study should then separate wholesale revenue, which depends on distributors and shelf space, from on-premises revenue, which depends on traffic and local rules. Model the loan payment against a year when distributors take less, and the appraisal must consider how specialised the building is. Texas whisky and wine rest in barrels for months or years, and cash locked in that stock is a use of funds the plan has to cover.