Why distillery financing is different
Distilleries tie up more cash for longer than almost any other beverage business. Stills and production equipment are expensive and specialized. Aged spirits sit in barrels for months or years before they can be sold, so money spent on grain, barrels and labor today may not come back for a long time. Many craft distilleries bridge that gap with unaged products, sourced spirits, tasting-room sales and events. Lenders who understand distilling look at all of those pieces.
What distilleries finance
- Production equipment: pot and column stills, mash tuns, fermenters, boilers, condensers, cooling systems
- Bottling and packaging: bottling lines, labelers, cappers and packaging inventory
- Barrels and aging space: barrel purchases, racking and warehouse space
- Tasting rooms and event spaces: bars, seating, kitchens and retail areas
- Facility build-outs: industrial conversions with fire-code, ventilation and utility upgrades
- Working capital: grain, bottles, labels, payroll and distribution ramp-up while spirits age
Loan types that fit distilleries
- Equipment financing. For stills, fermenters and bottling lines. Specialized equipment can mean shorter terms or larger down payments, so detailed quotes matter.
- SBA loans. 7(a) for build-outs, equipment and working capital; 504 for buying or building a production facility.
- Commercial real estate loans for owning the building, which matters when you plan to age spirits on site for years.
- Construction and renovation loans for production-space conversions.
- Business lines of credit for raw materials and packaging.
- Inventory-backed financing. Some specialized lenders lend against aging barrel inventory, typically for established brands with documented inventory. Availability and terms vary widely.
What lenders need from a distillery
- Federal and state permits. A TTB Distilled Spirits Plant (DSP) permit and the required state and local licenses.
- Revenue breakdown. Tasting room, events, retail, wholesale and distribution, plus how much comes from aged vs unaged products.
- Inventory records. Barrel inventory, ages and production records, especially for inventory-backed requests.
- Equipment quotes and facility plans. Including fire-code and safety requirements for spirits production.
- Financials. Bank statements, tax returns, profit and loss, balance sheet and a debt schedule.
- A realistic timeline for when aged inventory turns into sales.
Licensing in Colorado and Tennessee
In Colorado, distilleries need federal TTB approval plus a state manufacturer license through the Liquor Enforcement Division and local approval. Tasting-room and on-site sales rules depend on license type. In Tennessee, distillery licensing runs through the Tennessee Alcoholic Beverage Commission, and local rules affect where distilleries can operate and sell. Tennessee whiskey also carries a statutory definition that affects how certain products are made and labeled. Confirm current rules with the agencies and your attorney before you plan production or expansion.
Distilling in our two states
Tennessee is synonymous with whiskey. Beyond the famous Lynchburg and Tullahoma names, craft distilleries now operate in Nashville, Chattanooga, Knoxville and the Smoky Mountain tourist corridor, and many lean on tourism through the Tennessee Whiskey Trail and tasting-room visits. Tasting rooms are often the cash engine that carries a young distillery while its whiskey ages.
Colorado’s craft spirits scene grew alongside its craft beer culture. Denver has several well-known whiskey and spirits producers, and distilleries across the Front Range and mountain towns sell through tasting rooms, restaurants and liquor stores. Seasonal tourism helps mountain-town tasting rooms but creates uneven cash flow.
See our pages for Nashville, Chattanooga, Knoxville and Denver.
Before you apply
Have three months of business bank statements, tax returns, your TTB permit and state license details, a revenue breakdown by channel, barrel inventory records, and detailed quotes for the equipment or build-out you want to finance.
Questions owners ask
How do distilleries get financed?
Most use a mix: equipment financing for stills and bottling lines, SBA or bank loans for facilities and build-outs, lines of credit for raw materials, and sometimes inventory-backed financing for aging barrels. Lenders want permits, revenue breakdowns, inventory records and financials. Established distilleries with steady tasting-room and wholesale sales have the most options.
Can I finance a still?
Yes. Stills and other distilling equipment can be financed through equipment loans or leases. Because the equipment is specialized, some lenders shorten terms or ask for a larger down payment. Detailed quotes from established manufacturers, plus installation scope and facility readiness, make approvals easier. SBA loans can also include stills as part of a larger project.
How do lenders handle aging inventory?
Most traditional lenders give limited value to barrels that cannot be sold for years. Some specialized lenders do lend against aging barrel inventory, usually for established brands with documented production and sales history. More commonly, distilleries bridge the aging period with unaged products, tasting-room revenue and a working capital line of credit.
Does the SBA fund distilleries?
Yes. Distilleries can be eligible for SBA financing if they meet standard SBA requirements. SBA 7(a) loans can cover equipment, build-outs and working capital, and SBA 504 loans can fund buying or building a production facility. Expect lenders to review permits, financials and, for newer distilleries, a detailed business plan.
What permits must be in place?
Distilleries need a federal Distilled Spirits Plant permit from the TTB, plus state licensing (Colorado’s Liquor Enforcement Division with local approval, or the Tennessee Alcoholic Beverage Commission) and local zoning and building approvals. Lenders often fund equipment and build-out while permits are pending, but they want a clear permitting timeline.