North Carolina is on the craft beer map, with high-profile breweries settling into Asheville as well as a few other metros. More recently, Wilmington has become home to an increasing number of microbreweries, and there is word that one major craft beer maker is eyeing the Port City for its southeastern U.S. location.

Beer brewing brings its own distinctive requirements and involves everything from A (Alcoholic Beverage Control Board regulations) to Z (zoning). As the number of local brews has multiplied, so have the business services that make it possible for these new businesses to start up, grow and prosper. Between A and Z, there are considerations of I (infrastructure), L (location and legal) and, of course F (financing).

Naturally, finding the right location is fundamental to the success of a craft brewery, and that’s not as simple as it sounds, according to Patrick “PJ” Doherty, a broker with Carolina Commercial Investment Properties.

“I, as well as other brokers, have been speaking to larger regional and national-size breweries that have shown an interest in Wilmington,” he said. “There are several West Coast breweries as well as Midwestern breweries who see opportunities in North Carolina because of synergies created in Asheville, especially with Sierra Nevada and New Belgium.”

Big commercial breweries operate in industrial zones far from their customers, but small-  to mid-size ones want to be near as many consumers as possible, Doherty said.

“The profit margins in selling beer over the counter are exponentially larger than selling packaged beer, so you need butts in barstools,” he said.

Before microbreweries could locate in neighborhoods near potential customers, Wilmington had to amend its zoning ordinances to allow such “manufacturing” in areas reserved for small businesses. City officials, seeing the economic benefits of Asheville’s beer industry and recognizing Wilmington’s zoning limitations, worked with Doherty and others to make needed changes.

“We changed the law and wrote the code to allow this to happen,” Doherty said. “Once the code changed, all the nanobreweries started to open.”

The zoning change is helping efforts to lure a major craft brewery that would create what Doherty terms a “significant” number of jobs. He calculates that such a brewery would need to create at least 30 jobs if it hoped to qualify for economic incentives, which could be part of a deal.

Many community-oriented craft brewers like to find and rehab old warehouses to house their operations, but that isn’t easy in Wilmington, Doherty said. Many of those buildings have been torn down, and those remaining are generally not in areas with much foot traffic.

Any building – renovated or built from scratch – must be designed with the space and weight considerations of beer making in mind, Doherty added.

“That means architects, engineers, planners, construction people who need to learn the needs of a brewery building and its truck traffic [for distribution],” he said.

From finding a good location in the right zone to dealing with ABC regulations, almost everything a brewery does involves legal issues, according to Geoffrey Losee, a partner in the Wilmington law firm of Rountree Losee. A home brewer himself, he gained expertise in the laws governing brewing when he offered to help his supplier, Wilmington Brewing Co., when it decided to expand from just selling beer-making equipment and supplies to actually brewing beer.

“It’s anything you can imagine with a small business, plus added paperwork, because the industry is highly regulated,” he said. “The business is all controlled by federal and state regulations, and the genesis of those regulations is tax. The first permit [a brewery must get] is from the ATTB – the Alcohol and Tobacco Tax and Trade Bureau. It goes back to the capacity of a brewery, which is reported to the feds. They know what you can make, how much you did make and how much [product] you lost. There’s a clip board in the brewery to keep track of those numbers.”

Legal services for a brewery, Losee said, include helping the business fill out federal and state permitting forms; working on a real estate deal, whether a lease or a purchase; and negotiating contracts for supplies, services and distribution.

Another area of legal concern is what Losee calls cyber squatting: attempted theft of a business’s domain name or trademark. On the horizon, he said, is the protection of beer names as intellectual property and breweries’ recipes as trade secrets.

And then there are limitations on a beer maker’s social media use, as well as specific federal regulations governing beer names and label design, Losee said.

“Right now the brouhaha – pun intended – is that Founders [Brewing Co.] had a picture of a baby with a bowl of cereal on its breakfast stout label. You can’t have a baby; you can’t have nudity.”

Financing for breweries comes with its own wrinkles, as Wilmington-based Live Oak Bank learned while developing expertise to lend to the wine and craft beer industry.

“Lending to craft breweries can be challenging for banks because many breweries, even the established ones, will not cash flow when you look at the new loan request,” said Keith Merklin, a member of the bank’s Wine & Craft Beverage team. “When a bank underwrites a loan request they will try to determine if the historical business revenues and profits will be able to support the proposed new loan payment. A lender that understands the craft brewery industry will work to understand the business, the beers offered, the demand for the product and then use projections to help justify the request.”

Providing a loan to a start-up brewery is difficult, given the risk associated with any new business and the level of competition in the craft brewery market, Merklin continued.

“Most banks shy away from startups. However, some local banks will consider a startup if the brewery owner can come up with a sizeable down payment, which can be as much as 20 to 50 percent down,” he said. “The bank then issues a loan for the balance, which is paid off monthly for three to 10 years.”

The challenge for borrowers, he added, is that monthly payments start the first month of the loan. As a result, Live Oak has seen other startups look to family members, friends and early-stage investors for their initial financing.

Live Oak’s lending sweet spot, according to Merklin, is the established brewery looking to expand. The expansion can involve buying new equipment to help grow production or securing a larger brew house with a taproom.

“At Live Oak Bank, we will look at barrel production, tax returns, a business plan with projections and will go personally meet each borrow to talk about the project and their vision. We typically offer longer repayment terms and lower down payment requirements, which separates us from most banks,” Merklin said.

Because even established craft brewers may not have liquidity because profits are plowed back into the business, Live Oak has had to be willing to provide up to 100 percent financing and spread payments over terms as long as 25 years to improve the brewery’s cash flow, according to Merklin.