The Fed Cut: What It Means for Craft Beer Right Now

The Federal Reserve lowered its benchmark federal funds rate by a quarter point to 4.00%-4.25%. This marks the first cut since late 2024. 

The majority of taprooms carry some variable-rate debt — lines of credit for working capital, credit cards or equipment notes priced at Prime + a margin. The 0.25-point drop is worth roughly $2,500 per year per $1 million of average variable balance (about $208/month). 

For breweries working on SBA 7(a), borrowers get immediate relief when Prime falls due to program caps and many loan notes are tied to it. 

The larger projects — new real estate, brewhouse or packaging line — financed through SBA 504, pricing is linked to Treasury yields and not fed-funds directly. 

Equipment manufacturers, maltsers and packaging vendors that finance receivables off short-term benchmarks may see lower funding costs. That can translate to better vendor financing and looser net terms for breweries — especially on stainless, glycol and canning equipment. 

What won’t change for breweries is demand. The cut will not create demand overnight. While craft volume fell in 2025 and a further softening in the first half of 2025, the fed cut won’t repair the damaged headwinds on its own, but could assist in further stabilization if cuts and economy balance out. Note that most softening research revolves around “beer” as a craft factor and doesn’t take into account ancillary products, produced by craft breweries.

What you should do today: 

• Contact your banker and ask to confirm your LOC and variable notes reprice with Prime. Ask what your margin is and is there a floor. 
• If you’re sitting on Prime + 3.5% or higher, MCAs or short-term cash-flow loans, price a 7(a) or bank term refi while spreads are competitive. 
• If real estate or a major system is on deck, ask your CDC when the next 504 debenture prices and watch Treasuries for a window. 
• Reach out to your key vendors and see how they’re adjusting their promo APRs or terms. Use this new information to ask if they’ll reprice existing plans. 

What you can expect moving forward are cheaper borrowing costs. However, don’t think you’re going to receive a demand boom from this singular cut. Utilize the savings from refinancing or restructuring current loans to clean up your balance sheets, protect working capital and fund smaller projects to move product more quickly.