The first of Shmaltz Brewing Co.'s He'Brew Beer and Coney Island Craft Lager lines rolled off the company's own assembly lines in July 2013. It was the first time that the nationally recognized craft beer-maker had brewed its own labels since its owner, Jeremy Cowan, started the company in 1996.
Cowan credits a $3.5 million loan through The 504 Company for making it happen. Until his microbrewery in Clifton Park, a suburb in Upstate New York’s Saratoga County, began operations, the beer maker had been contracting out all of its brewing and packaging. The new microbrewery created 11 full-time and five part-time positions, and is preparing to add four new full-timers.
The 504 Company partnered with Ballston Spa National Bank to issue the $3.5 million in funding that Cowan used to buy equipment and fit-up the leased property. The benefits of the 504 program: a longer-term loan, lower interest rate and less money down.
"I guarantee you that this would not have happened without the SBA's 504 program. I approached private lenders, but could not have gotten the ratios that allowed us to do this project," said Cowan, who in years past grew Shmaltz using small personal loans, credit cards and, eventually, a line of credit. Cowan, of New York City, created Shmaltz Brewing Co. with $2,000 of his personal savings and contracted with a private company to brew and label his He'Brew and Coney Island Craft Lager brands.
Several breweries across the state have expanded with the help of the 504 program. Equipment costs alone can balloon into multi-million-dollar investments and those in the fledgling craft beer industry have not generated enough income to afford the 20-percent initial cash outlay required for conventional loans. The craft beer movement is gaining momentum, and The 504 Company recognizes Cowan and brewers like him must expand to meet a rising demand for their products.
"When Jeremy Cowan came to The 504 Company, he had done a stellar job of building his brands," said Ross Pancoe, vice president, The 504 Company. "He had delicious beers to support them, but he just needed access to enough capital to make building a brewery a reality. The 504 Company was able to provide him the access to capital that he needed."
Shmaltz's new 20,000-square-foot microbrewery can produce up to 20,000 barrels (or 250,000 cases) a year, and Cowan is already planning for growth. He and Ballston Spa National Bank are working to finalize a separate, $300,000 loan to buy more fermentation tanks and other brewing equipment. The expansion should increase production by 40 percent later this summer, and another 40 percent in the fall. Sales are up 40 percent over 2013's $6 million, and the increased production should add even more jobs.
Cowan describes the 504 program as "a very productive collaboration between private business and federal and state programs." He expects that coming through the process successfully will open doors in the future.
"I haven't experienced it yet, but once you have loans from institutions, especially government, it should be a helpful story," he said. "It gives you that added level of confidence."
Jeremy Cowan, Founder of Shmaltz Brewing
Tim Collins of Ballston Spa National Bank, with Jeremy Cowan of Shmaltz Brewing and Ross Pancoe of The 504 Company