A Decade of Double-Digit Growth

From 2012 through 2019, craft beer volume grew at double-digit rates annually, outpacing virtually every other segment of the beverage industry. The number of operating breweries in the United States grew from roughly 2,400 to nearly 8,000 in just seven years. The narrative was self-reinforcing: local tastes, premiumization, and an endlessly curious consumer base made expansion feel not just reasonable, but obligatory.

Founders who opened taprooms opened production facilities. Production facilities built out canning lines. Canning lines needed cold storage. Cold storage needed loading docks. Every step was an investment, and every investment felt justified by the trajectory of the market.

Debt-Financed on a Zero-Rate Foundation

Most of that expansion was financed with debt — and much of it with SBA loans. The SBA 7(a) and 504 programs were, and remain, the primary capital source for small brewery expansions. They offer favorable terms, longer maturities, and lower down payments than conventional commercial loans. For an owner-operator building out a 10,000-square-foot production facility in 2016 or 2018, an SBA note at a floating rate felt like a gift.

The key word is floating. The overwhelming majority of SBA 7(a) loans are variable-rate instruments tied to the prime rate. When interest rates sat at historic lows — the Fed funds rate was effectively zero from 2009 through 2015, and returned near zero from 2020 through 2022 — those floating rates were extraordinarily low. A brewery carrying $1.5 million in SBA debt at prime + 2.75% in 2021 was paying something in the range of 5.5%. By late 2023, that same loan was costing closer to 11%. Monthly debt service, in many cases, had nearly doubled.

Demand Contracted. Capacity Did Not.

Just as interest costs were climbing, the market softened. Post-pandemic consumer preferences shifted. Hard seltzer captured shelf space. Spirits and ready-to-drink cocktails pulled drinkers away from craft beer. Inflation compressed discretionary spending at exactly the income levels most likely to support taproom visits and $18 four-packs. Volume growth that had been near double digits went flat — and in many regions, turned negative.

The breweries that expanded most aggressively were left with capacity they couldn't fill. Packaging lines running at 40% utilization. Fermenters sitting cold. A taproom built for 400 covers serving 120 on a Saturday night. The fixed costs remained. The revenue did not.

Breakeven Moved. Materially.

At the same time, raw material costs rose sharply. Malt, hops, grain, packaging, and CO₂ all experienced significant price increases through 2022 and 2023. Labor costs rose. Delivery costs rose. Energy costs rose. For a business whose margins were already thin — a well-run craft brewery might net 8–12% before debt service — the compression in gross margin meant the breakeven point on that underutilized capacity climbed substantially. Breweries that needed to sell 4,000 barrels to cover costs now needed 5,500. And they were selling 3,200.

Asset Values Collapsed. That's Actually Good News.

The knock-on effect of all of the above has been a significant contraction in the market value of brewery assets. Fermenters, canning lines, taproom buildouts, and leasehold improvements that once commanded premium prices are now trading at steep discounts. Secondary market prices for brewing equipment have dropped significantly. Lenders who made SBA loans collateralized against brewery infrastructure have discovered that the collateral is worth far less than they anticipated at origination.

For struggling brewery owners, this might seem like another piece of bad news. It is not. It is, in fact, the opening for a negotiated resolution.

The SBA Debt Restructuring Opportunity

SBA lenders — and the SBA itself — have clear frameworks for addressing loans where the underlying business and collateral can no longer support full repayment. When the market value of a borrower's assets has declined materially relative to the outstanding loan balance, lenders have strong incentives to negotiate rather than litigate. Foreclosure on a canning line no one wants is not an appealing outcome for anyone.

The SBA Offer in Compromise (OIC) process, when navigated correctly, allows a borrower to settle an SBA loan for a lump sum that reflects the actual recovery value of the collateral — not the original loan balance. In the current environment, with beer infrastructure assets depressed, this means many brewery owners can close the book on SBA debt for a fraction of what they borrowed. The result is a clean exit: the business or its assets transfer, the personal guarantee exposure resolves, and the owner moves on without a deficiency judgment hanging over them for years.

This process requires expertise. The SBA OIC framework is specific, the documentation requirements are exacting, and the negotiation involves both the lender and SBA central office. Done incorrectly, borrowers can inadvertently waive protections, miss filing windows, or accept terms that leave them worse off than a structured liquidation would have. Done correctly, it is one of the most efficient paths out of financial distress available to any small business owner.

We Are Specialists in This Process

Lautertun Partners works with brewery owners at exactly this inflection point. We understand the SBA loan structure, the lender negotiation dynamics, and the asset valuation realities of the current brewing market. We have guided business owners through the Offer in Compromise process, the formal SBA workout procedures, and the broader restructuring of brewing operations — from triage through resolution.

If you are a brewery owner carrying SBA debt that your business can no longer service, the first step is a candid conversation about your situation. No obligation, no judgment — just a clear-eyed assessment of what your options are and what a realistic path forward looks like.

The window to act on favorable terms does not stay open indefinitely. As lenders work through their distressed portfolios and default rates rise, negotiating leverage shifts. The time to engage is now, before the lender controls the process rather than you.