Sam Adams founder loaning to businesses banks won’t touch

Craft beer pioneer and Sam Adams founder, Jim Koch, has been giving loans to entrepreneurs that banks often overlook.

They are the very people who are trying to tap into the food and beverage industry, some of which essentially compete against Koch's Boston Beer Company. But even with the potential for these smaller businesses to one day become competitors, Koch, a sixth-generation brewer who launched Boston Beer Company in the early '80s, sees it as his responsibility to support and nurture the craft beer industry.

"We're loaning to mom and pop, three-person businesses that banks don't even want to look at," Koch told FOX Business. 

Today, Koch's company has a market capitalization $3.42 billion and owns household names such as Samuel Adams, Twisted Tea, Angry Orchard, Truly Hard Seltzer and Dogfish Head Brewery.

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For well over a decade, Koch has been working alongside the Accion Opportunity Fund and other nonprofits to distribute these loans through the philanthropic initiative, Brewing the American Dream. The program seeks to assist entrepreneurs including helping them get access to capital. It also provides coaching and support to help them maintain and even grow their businesses. This combination has proven to be successfu. 

Not only does the program offer financial assistance but also guidance and support to help them succeed. The combination has proven to be successful. 

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In providing these loans, Koch is not just aiding in his rival's success but helping to stimulate economic growth.

Koch explained that they have a 98% repayment rate. Only one in 50 loans default, he said. 

"We want them to pay the money back because then we can loan it to somebody else," Koch said. 

It was an opportunity that wasn't necessarily available to Koch in the early days of his career. At the time, Koch knew all too well how hard it was to secure financing. In fact, many people thought his dream to build a brewery was a "joke."

"Well, it wasn't hard to get capital, it was impossible," Koch said. "No bank would lend me money...everybody thought it was a joke. I had a friend who was in a venture firm, and he's like, 'Jim, we're used to taking risk, but this is just ridiculous.' 

Koch recalled that even the "idea that you could start a brewery was inconceivable."

When Koch's father got out of brewmaster school in 1948, there were a thousand breweries in the United States, he recalled. When he started Samuel Adams nearly 36 years later, that number dwindled to about 50. 

"That was not a promising industry to make money at," Koch said.

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Koch estimated that there are around 10,000 craft brewers today, accounting for about 10% of sales within the U.S. beer business. 

"So we're all small relative to our real competition with these big global brewing conglomerates," Koch said, adding that they are all competing, even Sam Adams, with people 30 to 40 times their size. 

He believes they need to support each other. Additionally, "it's just more fun to be in an industry where you actually like and enjoy and admire and respect your competition," he said. 

Through the program, the company has helped create 11,500 jobs in local communities around the country. That's more than they have created in Boston Beer Company.