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Winery Loans & Vineyard Lending Options

Financing For Vineyards

A winery and vineyard are often used synonymously, but many times people traveling or driving down the road see a sign for a winery and think, “Grapes are grown in this area?” More often than not, that person is synonymously referencing a winery and a vineyard. A winery simply makes the wine from grapes that are grown in a vineyard. Sure, plenty of vineyards grow their grapes in a specific location and also produce their wine at that same location, but often times a winery is in a different location – vineyards are managed by farmers, wineries are managed by winemakers. Wineries offer fun and exciting events to come and try (and hopefully buy) some of the wine made there; wineries also sell to wine bars, which are a growing trend in many large cities; wine bars are the wine equivalent to a brewery today.

Winery Trends and Statistics

Wine was once an alcoholic beverage only consumed by baby boomers, and for many years people believed that wine sales were down thanks to the younger generations coming into play in purchasing powers; however, 2015 and 2016 have shown differently. Not only are wine sales increasing drastically each year, but fine wine sales are expected to grow 9-13 percent by the end of 2016 (fine wine is typically priced $20 and up); there is an expected 4-8 percent rise in $10 price range bottles of wine, and a drop for wines below $8 – millennials are moving into the high end wine spectrum. Wineries are also one of the largest industries in the United States; the winery industry has seen steady growth and is expected to maintain that growth through the next few years. The winery industry also has a huge economic impact – in 2015 alone, wineries and vineyards employed 786,000 people, while generating $114 billion in annual economic activity. However, for wineries to stay profitable in this highly competitive business, focusing on key trends for the winery industry is essential:

  • Wine technology and wine apps are growing faster than ever due to high demand from younger generations to have wine information at their fingertips. The younger generations today are not as wine savvy as the baby boomers, but their interests are being sparked, so wineries that have up to date apps that offer endless amounts of information to consumers are seeing profits increase.
  • Direct consumer sales, or sales made online, increase 8.1 percent in 2015, and are only expected to continue to increase as the age of technology and online shipping take over. Customers will pay the extra money to have their specialty wines shipped to them, so wineries that have great online and mobile websites have the upper hand.
  • There has been a drastic increase in the demand for sparkling wines today, particularly Prosecco and Sangria. These products have seen continuous growth in the past few years with Prosecco seeing 11.7 percent increase in value, and Sangria growing 9.8 percent.
  • Millennials are the most important industry trend to wineries across the country. They are also an incredibly difficult generation to read and cater to. This complicated generation wants exclusivity and access to rare wines at affordable prices, but they are not into brand commitment – they simply want value and an experience that is enjoyable.
  • While focusing on younger generations is key for many wineries, focusing on women should be just as high on the key demographic targets (especially millennial women!). Women comprise 56 percent of all the wine drinking population in the United States today (and 66 percent of the millennial population is women). However, there has been a surprising increase in the amount of men drinking wine as well.
  • As mentioned above, younger generations are the key demographic for wineries to be catering to, but this also means that an increase in green wine and production, organic wine, and wine products with a “story” matter most. Consumers today want the background and story of where there wine is coming from, how it was produced, and so forth. Wineries that become more transparent with their consumers will reap the rewards.
  • Wineries creating fun and engaging events for consumers are ahead of the game. As we all know, younger generations crave exciting, memorable experiences above all else. Being bold and innovative is the best way to attract the younger generation consumers.

Reasons a Winery or Vineyard Would Need Financing

  • Payroll is always a necessity for vineyards, being that it takes a number of employees to take care of the winery (from working in the fields, to the manufacturing of the end product). Making sure your employees’ payroll is covered at all times is crucial.
  • Expansion is always an exciting topic for a winery business owner that is doing well, but having enough up front capital to cover an expansion can be difficult, even if everything else is in order and ready for expansion. That does not have to deter a successful winery owner from stopping their business expansion though; reviewing the variety of loan options available to wineries can help.
  • Inventory is a priority for winery owners – without a plentiful wine inventory, wineries will miss out on plenty of business. Sometimes wineries need to stock up on inventory before a major peak season, or there is an opportunity offered for a once in a lifetime deal on a particular wine that sells very well; considering the variety of finance options available to a winery business owner for inventory needs is essential to avoid missing out on potential business.
  • New equipment is high up on the priority list for every winery business owner, so when reviewing the overwhelmingly significant impact that technology has had on every single industry sector in the United States, there will always be a time when a winery needs a new piece of equipment. For many wineries, this could be new Point of Sale Systems or other technological systems that will make business more efficient. For other wineries, it could be allocating more time and resources to updating their storage rooms for temperature controlled wines. No matter what the type of equipment is needed for a particular winery, there is always merchant loan options to help cover expensive up front fees.
  • Renovations are key to staying up to date and trendy for wineries! In a society dominated by first impressions, making sure that the store front for a winery is relevant and engaging to the desired customer base is essential. While not all renovation that can be done is overly expensive, sometimes situations arise that warrant the need for additional funding to facilitate and complete a much needed change; reviewing the different funding options available to wineries is always a possibility.
  • Marketing and social media is absolutely essential in today’s society. Consumers are heavily reliant on doing first hand research of wineries; they look at various marketing outlets such as social media presences, customer reviews, and reliability of a winery all before deciding to actually visit or purchase an wine or food at a winery.

Types of Winery Loans and Financing

Types Rates Terms Funding
Bank 6-10% 3-7 years 14-30 days
Bank 6-10% 3-7 years 14-30 days
USDA 5-7%% 7-30 years 30-60 days
Line of Credit 5-15% 1 – 3 years 7-30 days
Alternative 6-25% 1-5 years 5-7 days
 Cash Advance 1.16-1.55 3-24 months 1-3 days

Winery Bank Loans

If you own a winery with great credit and established profitability, then traditional bank financing is the best option. Bank lenders have financing options to cover just about any business need including purchase or refinancing of your commercial real estate, upgrades and improvements, working capital, farming needs, capital expenditures and other financing needs.

  • Rates: 5-10%
  • Terms: 1-25 years

Winery USDA Loans

Specifically created to help bolster employment and credit opportunity in rural areas, the USDA loan may be a good choice for wineries and vineyards that meet the USDA’s qualifications. The government is willing to provide loan guarantees to USDA lenders up to 80%, with facilities as much as $10 million or more.

  • Rates: 6-8%
  • Terms: 7-25 years

Winery SBA Loans

SBA loans are somewhat similar to USDA loans in that the government agrees to cover a percentage of the SBA lender’s losses if the winery fails to repay their SBA debt. SBA loans don’t have the rural population requirements and are more readily available than USDAs.

  • Rates: 6-8%
  • Terms: 7-25 years

Alternative Winery Loans

While fintech loans don’t offer as good rates as traditional and SBA lenders, they do offer affordable financing and fully-amortizing term loans. So while the rates aren’t as good as conventional loans, the speed with which the financing can be received is extremely fast, with loans closing taking less than two weeks.

  • Rates: 9-25%
  • Terms: 1-5 years

Asset Based Winery Loans

Asset based lending is a way for wineries to obtain operating capital by using the commercial real estate or the owner’s personal property as collateral. ABL lenders can offer up to a 3rd position on the land or building, and can fund within 3 weeks of applying.

  • Rates: 9-25%
  • Terms: 1-5 years

Winery Cash Advances

Simply put, cash advances aren’t loans to wineries, but really the sale of the wineries future bank and/or credit card processing transactions in return for immediate cash financing (with a discount to the lender). The financing company will deposit funds into your business bank account, and then collect a small fee each day until the loan is repaid.

  • Factor Rates: 1.16-1.50%
  • Terms: 4 months – 2 years

Get a Winery Loan

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