Viticulture Loans

Viticulture Loans

The state of California and other pockets throughout the country have a rich wine-making history. Places like Napa Valley have produced wines that are famous not only from coast to coast here in the states, but also abroad.

It is an oftentimes overlooked shining spot in the rich agricultural tradition of the United States. But before a drop of American wine can be manufactured, you must grow the grapes. Sounds easy enough. But did you know there is an entire science behind that bountiful red or sweet white you enjoy with your dinner?

What Is Viticulture?

Viticulture, which comes from the Latin word for vine, is a branch of horticultural science and is the science of grapes. This means it’s the study and production of grapes and dealing with the specific series of events that occurs within the vineyard.

The position of a viticulturalist is an important one. Without it, a vineyard cannot be successful. They are responsible for not only monitoring a wine grape and its characteristics, but also cultivating the plants themselves.

This means they need to monitor and control any pests, diseases, and make sure that the plants are getting proper fertilization and irrigation. They are also responsible for canopy management.

If you have a passion for wine and its manufacturing, farming, and creating products, perhaps you want to purchase a vineyard. This is where viticulture loans come in handy.

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Viticulture Financing

Viticulture loans are just what they sound like. They are monies granted to individuals looking to start or maintain a vineyard with the ultimate goal of making wine. They are available through banks, or brokers, and come with varying terms.

For the last few years, there have been reports that the United States economy is in a decline, with no real prospect of a quick turnaround. However, viticulture loans are still available. This is because the agricultural backbone of this country is strong, so lending remains for agricultural ventures with near historic lows for interest rates.

With other economic sectors in decline, agriculture remains productive and growing. This means that if you have been considering getting any viticulture loans to start your vineyard, now may be the time.

Although it may be difficult to believe – even with a weakened economy it is still feasible to get fully funded for a permanent planting operation. This includes vineyards. You can qualify for 100 percent financing as long as the proposed property’s income can support its debts.

This can be calculated using the debt-service-coverage ratio. Most lending institutions (banks, brokers, etc.) will only allow a maximum of 50 percent for the loan-to-value ratio for permanent planting operations such as a vineyard. So, in order to obtain 100 percent of your operation’s funding from viticulture loans, you will need to do some groundwork.  

All of this just means that the variances in underwriting criteria for viticulture loans varies greatly from lender to lender. In order to ensure the success of your operation, you will want to make sure you shop several vendors, ensuring you get the best loan for your vineyard.

High Grape Demand

Part of the reason it is still fairly easy to get viticulture loans is there is a high demand for the commodity of grapes. Vineyard real estate prices are showing increasing performance with many areas producing a strong appreciation year after year.

With this type of performance, perseverance, and strength, some financial institutions make it a point focus on agricultural lending – making it easier to obtain loan money for farms, ranches, and vineyards.

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Getting Started 

Before you can get your loan, you will need to do some legwork. There are some things you will need to have in place before you can start your vineyard, including picking a place for your vineyard. Though California boasts America’s most famous wine region, there are actually wineries in all 50 states, so no need to pack up and move if you don’t want to.

Build A Winery

The first thing you will want to ask yourself is if you should build a winery from scratch or purchase a pre-existing one. This will definitely impact the types of viticulture loans you apply for.  

If you are going to build a winery from the ground up there are several things you will need to consider. The very first being, finding the right piece of land. Not every type of land is sufficient for grape production.

Grapes are one of the harder crops to grow, so you will need to consider the soil, sunlight, and water. Not enough water will ensure a lacking grape crop, so you will need to be prepared install an irrigation system can be installed on the land. Also, temperature is a huge factor, too much frost at the wrong time of year can ruin the entire crop.

Make Decisions

You will also need to decide before you apply for your viticulture loans whether or not you intend to do all the steps to make wine on your own vineyard. Are you going to grow the grapes and then send them off to a facility for production or are you intending on fermenting them on site?

If you intend on starting your vineyard on a raw piece of land, and creating the structure yourself, there are companies that specialize in the installation and maintenance of backyard vineyards.

These companies can help you design, build, and manage your vineyard, even helping you with wine-making. They outfit both smaller and larger-scale wineries, and can offer a lot of guidance when laying out your design and production.

If you decide to purchase land and build a winery you can expect to pay upwards of $45,000 an acre for installation costs once its purchased, according to Inc., so planning wisely and partner with knowledgeable experts to greatly increase your chance of having a successfully winery.

If your purchase a pre-existing winery with your viticulture loans, you will save on installation costs, but you are more limited in design and grape choice. These properties also come with a heftier price tag than their plant-free counterparts, as much of the groundwork for your wine-making operation has already been laid.

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Owning A Vineyard

The thought of owning a backyard winery or a large-scale vineyard is an exciting prospect, but to ensure your success you need to seriously consider the above points before attempting to obtain your viticulture loans.

Beyond just the property and production you will need to have business plans for your venture to not only obtain your financing, but to help increase the chance of your vineyards success. You will also need to obtain business licenses, and, most likely, an accountant.

Since weather is vastly unpredictable from season to season, you will want to arm yourself with as much knowledge as you can about your venture and grape production. Of course, you will learn through trial and error, but having that research and knowledge can help you when obtaining viticulture loans, and above all help you ensure success from the get-go for your crops.

Don’t forget, many banks, brokers, and institutions have viticulture loans, so be sure to put all your pieces in place prior to shopping around to ensure you get the best pricing and terms for your venture.

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