Vermont Business Magazine The Small Business Administration supported $44,780,792 in loans to Vermont small businesses from October 1, 2017, to September 30, 2018, the US federal government’s fiscal year. Vermont increased its loan amount by 11 percent compared to fiscal year 2017 when it guaranteed $40,341,365 million in loans. Of that 16 percent supported Vermont beer, spirits and cider.
“An upward trend is always a good sign. Increasing our loans by a few million dollars may not seem like a lot, but when there are scores of Vermont entrepreneurs needing $10,000 or $25,000 in capital, an additional $4 million in lending can have a significant impact,” said Darcy Carter, SBA Vermont District Director.
Barrels of Stonecutter stand ready for action. Courtesy photo.
The SBA works with lenders to provide small business loans. It doesn’t lend money directly to entrepreneurs. It sets guidelines for loans made by SBA-certified lenders and then guarantees a considerable portion of the loan, sometimes up to 90 percent. The guarantee reduces risk, incentivizing lenders to make more small business loans.
Community National Bank made the most 7(a) loans in Vermont during FY18 with 35 loans worth $4,903,500 followed by TD Bank with 26 loans worth $1,004,400. Granite State Development Corporation made the most 504 loans with 17 loans worth $7,045,000.
A wide array of Vermont industries obtained SBA loans in FY18, including sporting goods stores, legal practices, software companies and restaurants. However, the industry that benefitted the most was the Vermont craft beverage industry. Breweries, distilleries and cideries received $7,089,500 in funding, 16 percent of the $44,780,792 SBA Vermont portfolio.
Craft beverage industry funding was provided through SBA’s two primary loan programs, the 7(a) and 504 programs. The 7(a) Loan Program is the most common SBA loan and is used for equipment, inventory and working capital.
“Stonecutter Spirits was awarded a 7(a) loan in May to expand our operations and build out new distillation equipment at our Middlebury location. We are committed to driving employment and economic development in our community, and can't wait until we get to flip the on switch with our new equipment,” said Sas Stewart, Stonecutter Spirits Co-Founder and President.
Craft beverage loans are often guaranteed by the SBA because equipment used for brewing and distilling can be expensive and large, and spacious accommodations are needed to house the equipment. A 504 loan provides long-term, fixed-rate financing for purchasing and renovating land, buildings and equipment. The 504 program is administered through certified development corporations, non-profit lenders established by the SBA because it does not directly lend.
In October 2017, Citizen Cider obtained a 504 loan to open a second facility and installed an apple press for fruit processing and storage.
“This facility is a crucial part of strengthening our supply chain. With its completion, we will be able to continue to purchase whole, fresh fruit directly from local growers as we continue to expand our business. We opened the facility in May of 2018, and are still in the early stages of recognizing the numerous benefits this project will have for the business,” said Justin Heilenbach, Citizen Cider President.
The SBA has assisted the cider maker since 2014 when it opened its location on Pine Street in Burlington.
“This is the second project we’ve worked with the SBA on, and the support has been really important for us as a business,” said Caitlin Jenness Citizen Cider Chief Financial Officer.
Throughout the year 15 different Vermont craft beverage companies from 10 towns received SBA funding.
The SBA’s two other programs are Community Advantage and microloans. Community Advantage loans are offered to undeserved communities through approved community-based lenders. The Vermont 504 Corporation made 11 Community Advantage loans worth $1,103,000.
Microloan intermediaries administer the SBA Microloan Program by providing direct loans up to $50,000 to small business owners who lack the collateral or credit history to qualify for a traditional bank loan. Community Capital of Vermont made 14 microloans worth $295,200 followed by Vermont Community Loan Fund with 10 loans worth $118,492.
Source: MONTPELIER, Vt. -- The Small Business Administration 10.11.2018