We are a distillery in San Francisco, CA focusing on making whiskeys from craft beer and are looking to expand our operations to distill and brew in house. We have been on the market for roughly 20 months, have a proven track records with two whiskeys available for purchase, a third release in April of 2015, a vodka and a line of craft bitters.
We currently self-distribute but have a distribution network taking over in October to expand our reach throughout California. To facilitate our growth and reduce our costs of production we are seeking to purchase a 15bbl brew setup and a 250 gallon copper pot still. We are currently looking for financing options to purchase this equipment.
If anyone has any suggestions I'd appreciate them.
You would do well to read up on Rule 506 ( c ) offerings.
Is this considered general solicitation? If anyone just has some experience in obtaining equipment financing that's really all I'm looking for. Appreciate the feedback.
Reply:Private investment offers are welcome
Got it, that part has been removed. Our local bank is hesitant to give us any funding because we are less than 3 years old.
Attach an equipment lease agreement to your business plan and approach people that want a relatively low risk investment (family, friends, elderly).The equipment can be worth almost as much or more than you paid because of the demand. If the business fails they get the equipment back to sell and may even make money off of it. We did it with our brewery and now our distillery. We offered a set percent amortized at 30yrs with a 3yr pay-off/ballon payment. We had a lot f people that wanted to do the equipment rather than shares in the company because they had a tangible thing to sell if things went sideways.
If you have decent personal credit some banks will give you a equipment loan that you personally sign for. I got approved for one but it would only pay for equipment, not shipping, tax or installation.
I have just worked with a Bank that did lease for an up and running distillery expansion, partly for my cooling equipment.
Their limit on leasing is $10,000 and they will lease new and used equipment.
I can email their info if you are interested.
Previous posters are correct on Banking info, a lot depends on your collateral.
We used Accion as our lender. They specialize in smaller (<$100,000) loans for startups. I see that you are in CA:
They require you 100% collateralize the loan, with either personal or business assets. And it basically amounts to a personal loan, as you must personally guarantee the money. The loan rates are pretty steep (8-10%), but their model is to serve as a bridge until you can qualify for a bank loan. Their is no penalty to buy off the loan or transfer it when you can. The New Mexico branch has been awesome to work with. They offer classes and workshops and lots of networking opportunities, and pride themselves on having a ridiculously low default rate because they try to help their customers as much as possible.