Why the beverage production sector uses CSBFP
Opening a craft brewery or distillery is capital-intensive at the production level before a single litre is sold. Fermentation tanks, kegging lines, bottling equipment, grain mills, distillation stills, and cold storage are purchased upfront; they do not generate revenue until the first batch is ready and the provincial distribution licence is in hand. CSBFP’s equipment category is the primary tool for financing this pre-revenue capital stack.
The taproom or tasting room — which many craft breweries and distilleries add to their production operation — adds a leasehold improvement component that CSBFP also covers. Combined production-and-taproom files (equipment plus leaseholds) are a common structure at or near the $500K non-RP sub-limit.
Eligible CSBFP costs for beverage producers
Production equipment
Craft brewery and distillery equipment eligible under CSBFP:
- Brewing equipment: Mash tuns, lauter tuns, boil kettles, fermentation vessels (unitanks, brite tanks), conditioning tanks, glycol chilling systems, hot liquor tanks, cold liquor tanks
- Kegging and packaging: Keg washers and fillers, canning lines (counter-pressure fillers, seamers, rinsers), bottle-filling and labelling equipment, case packers
- Distillery equipment: Pot stills, column stills, spirit-safe systems, receivers, condensers, barrel-filling and racking equipment, blending tanks
- Winery equipment: Grape crushers and de-stemmers, presses, fermentation tanks, pneumatic presses, wine fillers and corkers, labelling equipment
- Support equipment: CO₂ and nitrogen gas systems, in-line quality monitoring systems, refrigeration and cold storage units, grain mills and malt handling equipment
Taproom and tasting room leaseholds
Many beverage producers open a taproom or tasting room at their production site to sell directly to consumers. Eligible leasehold improvements for a taproom include:
- Bar construction (millwork, bar top, plumbing for draft lines, back bar cabinetry)
- Seating area buildout (flooring, lighting, acoustic treatment, HVAC modifications for a public area)
- Retail area for packaged product sales (display shelving, POS counter, signage permanently attached)
- Public washrooms (if the production facility did not previously have public-accessible washrooms)
Real property
A brewery or distillery that owns its production and taproom building can finance the real property under CSBFP up to $1,000,000 (within the overall term loan ceiling). Owner-occupied production facilities — where the business operates in the building — are eligible. Industrial condominium units purchased for production use are a common ownership structure for urban craft breweries.
Revenue sub-model: production vs. taproom
Craft beverages have two primary revenue streams, and the lender will model both:
- Wholesale/distribution: Revenue from kegs and packaged product sold through the provincial liquor board distribution system or directly to licensed venues. This is typically lower-margin but higher-volume.
- Taproom/on-site sales: Revenue from draft pints, flights, and packaged product sold directly to consumers on-site. This is significantly higher-margin per unit (retail vs. wholesale) but requires a provincial taproom or retail licence.
A business plan that projects only wholesale revenue will show a thinner DSCR than one that includes the taproom contribution. Most lenders on craft brewery files want to see both revenue streams modelled, with the taproom ramp separated from the wholesale ramp. A brewery projecting steady taproom revenue from month 1 of operation (before the licence is even in hand) will be questioned.
Licensing and provincial liquor board requirements
Beverage producers must obtain production and sales licences from the provincial liquor authority before selling product. Provincial liquor boards (LCBO, BC Liquor Distribution Branch, AGLC, etc.) have their own approval timelines and requirements.
The lender will ask about licensing status. A brewery or distillery that has applied for its production licence (with a realistic timeline to approval) is in a stronger position than one that hasn’t engaged with the licensing process at all. For taproom sales, the licensing condition (approval of the on-site retail endorsement) is often set as a condition precedent to the first taproom-revenue drawdown from the CSBFP LOC.
For farm wineries (operating on agricultural land under provincial farm winery licences), the agricultural land ownership interacts with the CSBFP real-property category in a nuanced way. Primary agricultural production (growing grapes) is not CSBFP-eligible; the winery operations (crushing, fermentation, barrel aging, bottling, tasting room) are eligible. The winery production facility and equipment are CSBFP-eligible; the vineyard itself is not.
Equipment valuation and the resale market
Brewing and distillery equipment has an active secondary market — a used 10-barrel brewing system or a pot still can be purchased at significantly below new-equipment cost. Used equipment is eligible under CSBFP at the purchase price, provided the purchase is arm’s-length and the price reflects market value.
A concern lenders will raise on used brewing equipment: if the business fails and the equipment is liquidated, what does it sell for? Highly specialized equipment (custom still designs, bespoke fermentation vessels) has a smaller secondary market than standard commercial brewing equipment. Lenders may apply a more conservative loan-to-value on highly specialized or custom equipment than on standard commercial grades.
A worked example: microbrewery with taproom
A microbrewery operator leases 5,000 sq ft of industrial space (10-year lease, 2,000 sq ft production + 3,000 sq ft taproom). Project:
- 10-barrel brewing system (fermenter + brite): $120,000
- Kegging and canning line: $60,000
- Cold storage and glycol chiller: $35,000
- Taproom leasehold improvements (bar, seating, washrooms, flooring): $175,000
- Total: $390,000
Equity injection: $50,000 (approximately 13%). CSBFP loan: $340,000. LOC: $75,000 for pre-opening working capital (production runs before first taproom revenue). Structure check: $390,000 non-RP — inside the $500K sub-limit ✓. Lease 10 years ✓.
Revenue projection at 12-month steady state: 900 barrels annually (60% wholesale at $400/barrel, 40% taproom at $1,500/barrel equivalent) = $216,000 wholesale + $540,000 taproom = $756,000 gross. After COGS and operating costs: EBITDA approximately $190,000. Annual debt service (term loan at 7.95% over 10 years): approximately $49,500. DSCR: 3.84x — strong. The risk on this file is the taproom licence and ramp, not the coverage once the business is operating.