What is Brewery and Distillery Asset Finance?
The alcohol industry is one of the most established both in the UK and globally. It is also one of the most accessible business platforms, with new players entering the market on a monthly basis. Craft ales and gins are some of the most in demand products as they come in a variety of flavours and can be tailored to suit consumers’ tastes or align with seasonal periods, such as Christmas.
However, creating these alcohol-induced masterpieces doesn’t come cheap, even for those competitors who only opt to compete on the micro-scale. The production process requires a plethora of equipment. Then you have the added pressure of transporting the finished product to re-sellers, be it pubs, bars, supermarkets or off-licenses. So how can finance help brewers and distillers products to be on everyone's wish list this Christmas?
What can be financed using Brewery and Distillery Finance?
In the Brewery and Distillery market, all aspects of the process can be funded with the help of finance. In the production phase, stills and fermentation equipment are required and must be of high quality. Copper is considered the material of choice amongst the brewing community but popularity has turned it into a prized commodity. Then casks and kegs are needed to allow your alcohol to develop a diverse and favourable flavour. Whether these are being attained from the continent or closer to home, they can be financed on either a Hire Purchase agreement or Lease. Both can then become a long term company asset.
Finally, you must satisfy customer demand by ensuring they can purchase and enjoy your products at their nearest convenience from a store or venue. Firstly, you need a fleet of transportation vehicles to get the finished product from A to B. Secondly, you must turn your attention to venues. Whether they are your own or those of your supply partners, they must be kitted out to the highest quality to ensure that the tasting experience is as encapsulating as possible. Tap rooms are becoming increasingly more popular with brewers and distillers, who gain full autonomy over the entire process. This will assist you in maintaining your current customer base and attracting new audiences.
How does Brewery and Distillery Finance work?
At GSM we work with 35 lenders, all of which have a different risk profiles and some are more comfortable lending on certain assets than others. With this knowledge we are able to take certain assets for your brewery, distillery or tap room to a range of lenders, to ensure you get the right tailored package.
It will start with a quote, invoice or purchase order from your supplier. Once this has been received, forward it to your dedicated finance broker, who will handle the application from there on. Your broker will set you up a profile, for which he will need your latest annual year-end accounts and the previous three months’ management accounts.
“PGs” (Personal Guarantees) are available from a director of the business then your broker will also need them to complete a Statement of Assets and Liabilities. When PGs are available, this generally gives access to better rates from our lenders as this gives them an added level of security so that in the worst case the director will guarantee the return of the financed asset.
Armed with all this information, your broker will take it to market and assist you in finding the most appropriate lender and will provide you with an indicative quote. Your indicative finance quote will outline the term of the agreement which is set to the business’s preference, as well as the monthly repayments due.
Should you wish to proceed, your finance broker will then take your application to credit, which will then be approved by the lender, and the funding will be allocated. The lender will then pay your supplier directly in full, your supplier will supply the asset and the lender will then collect the monthly payments from your or your partner’s business.
In July 2017, GSM Finance helped a Devon based brewer enter the market. This brewer’s aim was to create European inspired drinks using only British ingredients. They had the idea and premises, an old sweet factory, but needed to complete refurbishments and purchase the equipment in order to implement it. The overall deal took 15 months to complete and cost a total of £250,000 but saw GSM guide our client from start-up to sustainable business status.
Contact us today!
To find out more information or start an enquiry for your business or on behalf of your supply partner, contact us to speak with a member of our Brewery and Distillery Finance team.