As the popularity of craft beer continues to increase in the North Bay and beyond, so too have the efforts among lenders to provide expertise and capital for the industry's growth, according to brewers, bankers, advocates and advisers of the craft beer industry.
It is a trend that points toward an increased confidence in the long-term potential of the current craft beer boom, making it easier for both startup and established breweries to attract investors and loans.
"You used to hear the horror stories of, 'It took three banks to get the money I needed.' Now, you have three banks competing to provide that loan," said Paul Yeomans, vice president and leader of the commercial banking team for Argent Bank in Sonoma County.Spotlight on North Coast craft brewing
Read about the leaders of 14 of the largest North Coast breweries in this inaugural report.
Sonoma County alone now has 21 craft breweries, which together with cider-makers and distilleries added $123 million to the county's economy in 2012, according to a recently released map by the Sonoma County Economic Development Board and a groundbreaking study of the sector released last year. Three of those breweries have opened since June, with indication that yet more are in the works.
Demand for those high-end brews has so far left plenty of room for new entrants to the marketplace in California, the largest producer of craft beer in the country. Over 300 new breweries opened in 2012, contributing to a 20 percent increase in production volume state-wide, according to the most recent data from the nonprofit California Craft Brewers Association.
"One of the things I will often ask our members is, 'What are your biggest challenges?' These days, more often than not, the challenge is meeting the demand for more product," said Executive Director Tom McCormick, whose organization represents over 400 breweries in California.
Yet expansion does not come cheaply in the craft beer industry, with upgrades made all the more difficult by intense demand for used equipment, Mr. McCormick said. It is in these conditions that some banks are seeing an opportunity, honing their approach to that industry's nuances while embracing the security of tangible collateral like tanks and other equipment.
"If you go back 10 years, financing would be much more difficult," said Mr. Yeomans. He recalled past efforts by lenders to calibrate their activities for wineries, and that "the wine industry has gone through what the beer and cider industry is now working at."Going 'mainstream'
[caption id="attachment_87380" align="alignleft" width="224"] Richard Norgrove[/caption]
It was 17 years ago that the now Cloverdale-based Bear Republic Brewing Company sought a small business loan backed by the U.S. Small Business Administration as part of a three-pronged startup strategy, aiming to augment that capital with family contributions and a private stock offering, said CEO Richard Norgrove.
Yet despite what Mr. Norgrove said was a meticulously researched business plan, finding a lender at that time willing to finance a brewery and restaurant in Healdsburg proved difficult. The search widened, and ultimately found Mr. Norgrove and his co-owner son of the same name at Truckee River Bank near Reno, Nev. -- then the nation's top SBA lender to craft breweries.
"Within 72 hours, we were approved," Mr. Norgrove said. "When you're going out there to get funding, go out to where people already know your business."