TMC Financing Helps California Vintners Secure $3.8M through SBA 504 Program
February 2023 – When Les Lunes Wine launched in 2014, owners and vintners Shaunt Oungoulian and Diego Roig grew and processed grapes themselves; as the business grew, for a time they used a custom-crusher – a third-party that processes the grapes to their specifications. In 2022, Shaunt and Diego embarked on the next stage of growth: Purchasing an existing facility and equipment to bring production, distribution, and warehousing under one roof and gain greater control over their long-term occupancy costs and manufacturing processes.
Here’s how TMC Financing and an SBA 504 loan helped them close on a $3.8+-million deal to achieve their goal.
Leveraging an opportunity with the SBA 504 loan program and TMC Financing
It was the team’s real estate broker who suggested TMC Financing’s SBA 504 loan for their facility purchase. They got in touch with TMC and soon, the process of purchasing their facility and necessary equipment was underway. Shaunt explains that their TMC Business Development Officer, Anna Rummelein, was a tremendous help throughout the process, from application to close, and TMC advocated on their behalf to make the property-and-equipment purchase a success.
“The SBA 504 loan program was clearly the best option for us. In fact, conventional loans just weren’t even feasible, given the much higher owner equity that they require,” Shaunt explains.
Conventional commercial mortgages typically require 20-30% as a down payment, while most SBA 504 loans only require 10%.
SBA 504 financing for commercial real estate and essential equipment
Another advantage that was important for Shaunt and Diego was that the SBA 504 loan program allowed them to roll the cost of equipment into the loan package – something that’s not available through conventional real-estate loans but was critical for them. In this way, the Les Lunes team also benefits from the longer amortizations available with the SBA 504 loan program, with more affordable monthly payments.
“A key benefit for us was that TMC Financing and the SBA made it possible for us to purchase used equipment from another winery,” Shaunt explains. “This was a bit of an outlier for the program, but the seller worked with us to get the appraisals that we needed and TMC and the SBA made it work. Because we were able to do that, we got a lot more than we would have if we had to purchase new equipment. That’s made a huge difference in what we’ve been able to do with our winemaking operation.”
With their acquisition, Les Lunes can process, ferment, and bottle the wines without a third-party, giving them total control while stabilizing occupancy costs for the long term.
“The SBA 504 loan process is complex, but not any more so than you’d experience with other commercial loans,” says Shaunt. “We also had Anna and the TMC Financing team behind us, which kept things moving. Working with the TMC team was great for us. Now, we have everything together and do the work in house, which saves time and expense.”
The right financing enables Les Lunes to focus on growth and giving back
Leasing acreage – about 50 acres in total – from other vineyards enables them to produce a variety of wines from their Richmond, CA, home base and with their own facility, Les Lunes Wine can focus on efficiency, quality, and growth. Les Lunes also gives back to the community, offering a mentoring program and business plan for new winemakers, including free mentoring for vintners (or vintners-to-be) who identify as LGBTQIA and BIPOC, with insight about how to get started in the industry, advice for starting and scaling production, distribution, and more.
TMC Financing can help your small business grow, too
If your business is located in TMC Financing’s service area of California, Arizona, Nevada, and Oregon, contact us to find out more and to get started with the SBA 504 loan program. There’s a tremendous range of eligible projects – including opportunities in the winemaking industry, from manufacturing, warehousing, and distribution to vineyard acquisitions and more. And if your business is located outside of our service area, try the SBA’s Lender Match tool to find a qualified certified development company (CDC) lending partner near you.