Let’s Vine and Wine. What You Need to Know About Vineyard Loans

Let’s Vine and Wine. What You Need to Know About Vineyard Loans

Days of wine and roses. Strip those romantic trappings and we have a venture that requires $15,000 to $20,000 or even more to develop just an acre. It further takes time to establish a vineyard and build a winery and bring it to full production. There’s also the effort put into maintaining the vineyard and making sure the grapes are well-suited to the climate. Time, effort, and money are needed and vineyard loans can take care of the financial aspect.

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Vineyard Loans by the Numbers

Although California traditionally tops the list with the most number of wineries in the U.S., states like Washington, Oregon, and New York also produce their fair share of wine. The thing with vines and wines is it borders on being a hobby farm and a full-fledged farming business.

If you plan to develop your vineyard and access financing for it, you need to consider the land itself, the variety of grapes to be grown, and the size of the lot among a myriad of considerations.

From your end and your co-borrowers if you are borrowing as a group, you need to focus on your financial position and balance sheets of your consortium.

Get to know your capability to pay for vineyard loans whose terms can be as follows:

  1. Their repayment term can be one year.
  2. They can finance 65% of the total costs.
  3. Equipment financing may be available that can be three to seven years to pay. Down payment on that loan ranges 15 to 20%.
  4. Real estate loans — to buy the vineyard – may be repaid in 10 to 20 years’ time. A sizeable down payment of 35% of the purchase price can be required.

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Things to Remember

Needless to say, vineyards are a work in themselves. They take time for owners to recoup their costs and these costs start to rack up even two or three years before the vineyard is established.

This explains why lenders consider vineyard loans as risky and would thus require a higher down payment on secured loans or finance a safe portion of the growing costs.

It’s only right to hire people capable in this field. More than a business plan, these people should have knowledge in viticulture and experience in the relevant industry in order to manage the vineyard efficiently and steer it to profitability.

Vineyard Loans vs Winery Loans

A vineyard can be with or without a winery. Should the time come for you to build one, there are winery loans. The two — winery loans and vineyard loans — may be interchangeable but their specific terms will vary from the repayment period to the down payment.

Construction costs on a winery will be expensive and it will take time to see a return on investment. These are some things you should consider when getting a winery loan.

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