Banks are specializing their businesses. Vertical loan programs, for instance, create banking teams and branches that zero in on a business sector (say, agribusiness, energy or the beverage industry), providing multiple loan opportunities, banking services and advice and insight from financial professionals that understand your market. Blairsville, Ga.-based United Community Bank thinks the craft beer industry is perfect for the vertical banking approach.
“Our SBA loans cover a wide range of brewers’ financial needs from real estate and equipment purchases to working capital, debt refinance and business acquisition,” explained Ken Jernigan, who will oversee the bank’s craft beer vertical. “With our industry experience, we can work closely with brewery owners to develop the most appropriate funding methods for their enterprises. Most brewers don’t realize how active the Small Business Administration is in this space. Through SBA programs, lenders have written over 450 loans to more than 325 brewers nationwide. They’ve helped some pretty well-known brands, such as Lagunitas and Dogfish Head, grow and prosper.”
United Community Bank’s Craft Beverage Vertical will offer US Small Business Administration (SBA) and Department of Agriculture loans nationwide to craft brewers and allied enterprises. Under these programs, the group can fund working capital, real estate purchases, construction loans, inventory, premises improvement, equipment and installation. Jernigan and his team will be there to help, give insights and (hopefully) see clients succeed.
“Not that I have any monopoly on brewing knowledge, but it’s really the same for any fast-growing business,” Jernigan. “Entrepreneurs need to know their companies, operations and distribution inside-out. They should be able to explain how the company succeeds clearly and concisely. Not long ago, I met with an established North Carolina brewer who was able to show me all his relevant sales and production numbers over the last 12 months graphed out on his phone. I was impressed.”
Jernigan joins United with more than 25 years of experience in finance and marketing. Jernigan is based in North Carolina but will operate nationwide. Initially, he will focus on Southeastern states that are experiencing high levels of growth, including Virginia, North Carolina, Florida and Texas. What advice can he give about finding a good lender? Well, we asked:
“Many times, especially for early stage brewers, funding is the last thing they think about,” Jernigan said. “This can sometimes result in a real dog’s breakfast of capital supporting business assets. More importantly, it can unnecessarily increase the cost of capital. Through thoughtful planning, the various sources of finance can be deployed where they are most efficient. This approach can preserve company liquidity, useful to meet that unforeseen cost that inevitably comes around.
“Most importantly, the financing relationship is built on trust. Brewers need to feel comfortable with their funding sources, whether equity or debt. And honesty and frankness are the coin of the realm here. It serves no one’s interest to withhold relevant information or lead someone down the path promising things that can’t be delivered. Second, try to find a lender who understands your business. She’s your advocate when the loan goes to underwriting and needs to know the business like you do. And finally, but just as important as the other two, work with a lending team with deep SBA experience. It’s a valuable program for young, expanding enterprises, and a qualified lender can make all the difference.”