Question – We own a successful vineyard and winery in Indiana that has been in business for 15 years. Over the years we have built a leading brand in our region through a great product and aggressive retail distribution but what makes the most profit is through tasting room sales. Our current problem is that our tasting room consists of a 400 sq. ft retail area that has capacity enough to accommodate 20 to 30 people at a time on a heavy weekend or during festival events. Festivals will typically bring in over 300 people and we are losing a lot of sales because of it. In addition to limited retail space exists a 5 x 6 restroom with a single commode and sink inconveniently located amidst a back hallway corridor roughly 50 yards from the retail area where customers must enter the winery and are welcomed for wine sampling and gift shopping. Another growth area will be in having a wedding and conference facility to take in the beauty of our vineyard. Several other wineries have popped up over the years and just having a good brand is no longer good enough. The customer expects quick service and comfortable restroom facilities.
We want to get a loan to expand our winery but not sure what program to look at. We expect to spend $250,000 in the expansion. Our business has been built through savings but we don’t feel that that is realistic due to ever increasing working capital needs as retail sales continue to grow. What would be the best expansion loan for a winery?
Our Response – There are several potential avenues to explore in getting funding for your business. In Indiana, there is a little known loan guarantee program through the State that can guaranty up to $300,000. Being that you are in an industry that brings in a lot of out of state tourists, they would have an interest in assisting your project. A more conventional source would be to get a guarantee through the SBA 504 program, SBA 7(a) program, SBA Rural Business Loan , or a USDA Business & Industry Loan. Any of these products would work for you. The 504 would probably be my first choice with the limited information due to the amount you are asking for and the money being used for construction.