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

Small tickets in a deep Washington class

In Washington, SBA approved 145 loans under 7(a) from FY2017 to FY2026 for businesses that make beer, wine or spirits, with gross dollars of $65.8 million. Washington's rank for this pairing is 6 by loan count, and at home the class is ranked 12 of 39. Size is the headline figure, because $150,000 at the median is only 0.60x of the nationwide 7(a) benchmark, and the central half of the book sits between $50,000 and $453,000. Washington producers borrow far smaller sums than their national peers, and no franchise appears in the class, at 0.00% of loans.

Lenders and the map

Banner Bank is the largest current holder SBA reports, with 28 loans and $6.9 million, closely followed by Columbia Bank with 26 loans and $7.0 million. KeyBank National Association holds 17 loans and $7.6 million, Washington Trust Bank 11 loans and $9.0 million, and Harborstone CU 5 loans and $7.6 million. The last two hold large amounts per loan, which is why dollar and loan rankings differ. King County leads with 43 loans, well ahead of Benton at 13, Spokane and Walla Walla at 12 each, and Chelan and Whatcom at 10 each. A borrower should look at the county peers, not the state total.

Washington's cancellation floor is 5.9%: that share of loans approved in FY2017 through FY2024 was cancelled before funding, and counting undisbursed loans changes nothing, the ceiling being 5.9% as well. Not one of the 65 Washington loans funded in FY2017 to FY2021 has been written off yet, so both the running figure and the five-year figure read 0.00%. Treat both as floors. In SBA's coding the borrower simply makes beer, wine or spirits, so any taproom, tasting room or events at the site stay invisible in the numbers, and wineries are included in this class.

Testing a Washington producer request

Any Washington study of a producer must separate production economics from hospitality economics. Production calls for capacity, equipment and grape or grain supply, plus the permits that govern alcohol manufacture. Hospitality needs traffic, which in turn requires a location people will drive to. The study should reconcile a loan near the $150,000 median with the real equipment and build-out budget, show debt service coverage in a slow first season, and test distribution contracts as a revenue source. An appraiser must treat the specialised production building and its tanks, barrels or stills with care.