Brewery Startup Costs Explained
Who hasn’t daydreamed about opening a small craft brewery with their friends? While the reality of starting a business from scratch can seem intimidating, it is still a worthwhile effort. The brewing industry is estimated at $22.2 billion in retail sales, so the venture can turn out quite lucrative.
The only way to make money, however, is to invest a particular amount yourself. In this article, we will break down the overall brewery startup costs and address the following questions:
- What one-time expenses you need to cover
- What recurring costs you should prepare for
- How small business loans work
- How to apply for a startup loan using DoNotPay
The average startup cost for a brewery ranges from $500,000 to $1 million depending on the following factors:
- The size of the brewery
- Level of production
Microbreweries and nano breweries require a smaller budget in comparison to large-scale productions, but the startup costs are still substantial.
Take a look at the table below for an overview of the one-time startup costs for a microbrewery:
|Microbrewery Startup Cost||Average Amount|
|Initial operational costs||$60,000|
|Licenses and permits:
|Insurance and legal fees||$7,500|
The recurring costs for a microbrewery include:
- Labor—The average rate for non-union brewers is approximately $12 per hour
- Materials and ingredients:
- Malt—40 to 50 cents per pound
- Hops—$4 to $5 per pound
- Yeast—13 cents per-six-pack
- Packaging—20 cents per bottle
- Utilities—Depending on where you are based and the size of your brewery, the water bill can be between $125–$150 a month, while the cost of electricity ranges from $350 to $400
- Equipment repairing and maintenance—The condition of your equipment will influence the overall upkeep costs. It is a good idea to set aside a couple of hundred dollars each month for emergencies
Since it is difficult to determine the exact budget for your microbrewery, running out of funds is more common than you’d think. Instead of abandoning the project altogether, why not apply for a small business loan?
Small business loans are a way to procure the necessary resources for small to medium size business ventures. You can get a loan from:
When it comes to startup loans, securing one is a bit more challenging. New businesses lack longevity and demonstrable credit history, which are the basic borrower qualifications. If you are thinking about applying for a loan, you need to find a lender that is willing to invest in a startup.
- SBA loans—The Small Business Administration (SBA) is a solid choice for startups since it provides access to nationwide lenders. A huge number of banks and non-profit organizations collaborate with the SBA, increasing your chances of getting a loan. The interest rates vary from program to program but typically start at 5.5%. The repayment terms are also quite generous, ranging from five to 25 years
- Microloans—This type of loan is great if you have only made a slight miscalculation and need a quick, small investment. Note that the maximum amount for microloans is $50,000
- Equipment financing—Any type of asset-based financing is a great choice for breweries since the business model relies on heavy machinery. The rates typically start at 7.5%, and you are required to put in a down payment
- Crowdfunding—Many entrepreneurs turn to websites like GoFundMe or Kickstarter to avoid the strict lender requirements. With crowdfunding, you receive funds directly from the general public, and there are no interest rates or loan terms
- Friends and family—It is common to ask for loans from close friends or family when you are launching a new business. You can work out the loan terms together so that all parties can benefit
If you want to cover the startup costs for a microbrewery without draining your savings account, make sure you are eligible for a loan. The application process is quite complex, starting with the amount of paperwork you will need to file.
Before you apply, gather the following documents:
- Business plan and financial projection
- Personal and business credit score reports
- Financial statements on:
- Profit and loss
- Cash flow
Once you have all the documents, you need to compose a loan request letter introducing your business and the loan details. That is where DoNotPay comes in!
Our Business Loan Request Letter product can generate a watertight application form with a few clicks, helping you make your case with the chosen lender.
Here is how to access the product:
- Sign in to your DoNotPay account
- Select the Business Loan Request Letter product
- Answer questions regarding your business and the loan you want
- Upload the required documents
DoNotPay will deliver your letter to the loan provider in no time.
Need help finding a suitable lender? Our app has got you covered once again. Our integrated Find Online Business Loan Lender product will pick the top lenders for your needs!
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