Chapter 67: Golden Grain Soju House(2)
TL: Hanguk
After Jacob left, Chloe and I settled back into the study room, and this time it was Armando standing in front of the whiteboard, laying out the backstory.
"So here's the thing... I've mentioned it a few times, but I wanted to build my own farm too. I'm not clueless about reality, though, so I kept it as just a daydream. You know? I studied hard."
"I know. I just don't know what your grades were."
"Objectively, they weren't bad. You're the monster. How does someone who farms and barely even shows up to school manage to get perfect scores on every test? Even by Asian standards, that's unfair."
"...... Anyway, not the point. Moving on."
"Yeah, moving on. So whenever I had free time, I'd drop by real estate offices and ask around. Any decent farms on the market?"
Just as I thought... Vineyard listings aren't publicly posted at the school, so it made no sense for him to just casually name-drop a $1.1 million property that came with a winery. It becomes easier to understand if one pictures some Korean student saying he's going to start a brewery and take out a loan of over 1 billion won.
Chloe clicked her tongue in disbelief.
"A student, of all people, building dreams around an actual $1.1 million listing... You don't seem to realize that even a $10,000 loan can ruin a student if it goes the wrong way?"
"Ha! I probably know that better than you. That's exactly why I was just watching from the sidelines. Just daydreaming. Because selling grapes alone isn't enough to cover loan payments."
True. The single most decisive reason the former owner of Redwood couldn't run the place properly was that he couldn't make wine well. It's hard to turn a profit selling grapes alone.
Armando still hadn't been able to prove his winemaking skills to his parents, which meant he couldn't confidently make his case to them.
Chloe folded her arms and nodded along with Armando's defense.
"But vinegar's a different story?"
"Exactly! If my buddy Brian passes down his vinegar recipe to me, I just have to make it the same way and sell it. There's already an existing customer base that's hooked on the vinegar, and I just pick up where they left off, right?"
"But then it wouldn't be Redwood Vinegar anymore. The farm name would change too. Don't tell me you're planning to sell it under some name like 'Armando Vinegar'? Nobody's buying that."
At her sharp question, Armando suddenly went blank and shot me a look. His eyes asking whether there was a way around it.
"We're splitting it 7:3 anyway, right? If I keep the brand and have Armando do OEM (contract manufacturing), there's no legal issue."
"Ohh, that's it!"
Armando broke into a bright grin again and then said,
"I looked into loans too. With the Beginning Farmer loan and the 5% down payment program, I put in a minimum 5% of my own equity, the FSA lends 45% of the purchase price at low interest, and they let you cover the rest with a commercial bank or seller financing!"
I had to admire how thoroughly Armando had prepared.
"You did your homework."
"Of course. I wanted to be perfectly ready. I even found out that funds specifically for Socially Disadvantaged applicants are an option. Hispanics and Latinos are legally classified under SDA, apparently. But the Beginning Farmer loan combined with the down payment program looked like the best deal."
It was the same loan structure our family had used when we acquired Redwood.
Chloe's eyes sparkled, clearly intrigued.
"So when are you going to buy it? Are we heading to the bank right now?"
Armando hesitated and looked at me.
"When would be good, you think?"
I scratched my head and, after a pause, spoke.
"This isn't my deal, so it's hard for me to say anything off the cuff... The cheapest time to buy would be winter, and from now until harvest, prices are going to keep climbing. It could even push past $1.4 million. Did you find out why they're selling?"
"Yeah. It's a small farm, but they grow two varieties, Cabernet Sauvignon and Merlot, and since prices aren't going up, they're struggling. So they sell wine to the tourists passing through and make some income off grape-growing tours, but even that isn't cutting it."
"What about last year's wildfire?"
"Lucky for them, it passed right by. Apparently the neighboring farm burned down instead. But I don't fully buy it. I didn't go see the place myself, I just heard it from the realtor."
Actually going all the way out to the farm to verify things when he had no money in hand was, honestly, past the realm of mere interest and into strange territory.
"Then you'll have to blend the two varieties to make vinegar."
"Is that a bad thing?"
"Not really... The sugar content and acidity will shift, so you'll need to adjust a little, but it's nothing that rises to the level of a problem. You might actually be able to age it longer than we do here, which could enhance the flavor."
"Ah, right. Redwood has to free up the stainless steel fermentation tanks for the next batch, so we can't keep them tied up for vinegar alone. If you're making only vinegar, the aging time can be longer."
"13 acres, was it? Hmm... mixed with Merlot, you'd easily get around 40 tons. If it all goes into vinegar, annual revenue would come in at a minimum of $400,000. Maybe closer to $450,000."
Armando's eyes went wide and he nodded vigorously, agreeing with every word.
"Factor in fixed costs, and assuming John Anderson continues to handle distribution, you'd clear at least... $250,000 a year."
Thrilled, the kid clenched both fists and said,
"And if I've got the margin, I can bring in grapes from other farms like you do and make vinegar from those, which could leave even more profit."
"Right."
"Hehe... Well? Doable, isn't it?"
"I mean, yeah. It's doable..."
"And if I'm going to buy, now's the time?"
"That part's also true..."
"Done! I'm heading straight home, so Chloe, draw up a contract for me like you did for Jacob. I've got to show it to my mom and dad, so make it formal and clean. Got it?"
"......"
"Later!"
Armando snatched up his things and breezed out. As I stared after him, dumbfounded, Chloe spoke up, looking amused.
"You're the one who made him like that."
"Me?"
"Yeah. You showed him, up close and perfectly, what success looks like. And out of all of us, Armando is the lowest risk. His growth ceiling might be lower, but for Armando, stability is probably more important."
"Probably, yeah."
There was one thing I couldn't argue with, though. That at his age, he could become the owner of a farm worth over a million dollars. Knowing what that really meant, it was easy to understand why Armando was so fired up.
Downtown Sacramento, inside a Rabobank branch ringed by glass walls. In front of the loan consultation booth, Jacob was already feeling his palms start to sweat. Tucked neatly inside the thick blue folder were the USDA NRCS documents, the SBA (Small Business Administration) loan application forms, and even a copy of the TTB DSP permit that had arrived in the mail a few days earlier.
"Honey, are you okay?"
Maggie, sitting beside her son, asked in a quiet voice. Fitting for a farmer's wife who had been nursing her ailing husband, she was just an ordinary housewife in a plain dress, clutching a worn wallet tightly in her hands.
"Mom, I'm fine. I'm just nervous."
Jacob forced a smile, but his chest was pounding like a drum.
A moment later, the consultation room door opened and a middle-aged bank employee stepped out and waved them in. The nametag read [Richard Collins – Loan Officer].
"Mr. Jacob Miller, correct? This way, please."
The consultation room was compact but tidy. A monitor and an electronic signature pad sat on the table, and on the wall hung a framed slogan: [Agricultural loans are the future of our community]. Fitting for an agricultural finance bank centered on California's Central Valley.
Richard took the folder and continued.
"Sacramento Valley Distilled Spirits Plant. You've obtained your distillery permit? Your age... your birthday's already passed. Twenty-one?"
Jacob flinched for a split second but nodded.
"Yes, that's right. I'm not doing this alone, though. I'm preparing it based on a partnership with our family farm. The raw materials are already secured."
"Name of the farm?"
"Golden Grain Soju House."
Richard jotted a note with a skeptical look in his eye, then turned toward Maggie.
"Ma'am, you're here as the guarantor, correct?"
"Yes."
"Your son is requesting a fairly substantial amount. $500,000 in initial facility costs, and up to $750,000 once operating capital is included. Are you aware of how significant a risk this represents?"
Maggie drew a slow breath. Honestly, she didn't know the specifics. When it came to farm expenses, the most she could picture was the cost of a tractor or fertilizer. But her eyes were steady.
"Yes, I'm aware. But my son will get this done, no matter what. After my husband was confined to his sickbed, this boy ran the farm on his own. He got us through the hard times, and now he's trying to start something new. He's even been buying all sorts of Eastern distilled spirits to bring home and taste, because he wants to make a distilled spirit himself. I believe in that passion of his."
Richard nodded, then looked at Jacob for a moment, tilting his head slightly.
"The fact that you have the permit is a good sign, but the distilled spirits market is volatile. Unlike a winery, the payback period relative to initial investment is long. And I understand you don't have any sales contracts yet?"
At the pointed question, Jacob drew in a breath. It was time to deliver the lines he'd prepared.
"Correct. No contracts yet. But we have a competitive edge on the raw materials side. Our farm reliably produces Calrose medium-grain rice on 80 acres every year, which translates to over 400 tons secured annually. Our cost stability is essentially locked in."
He pulled a chart from the folder and slid it across to Richard.
"As you can see here, the current average price for rice-growing farms in California is about $280 per ton. Since we grow it ourselves, we don't incur a separate procurement cost. We can convert it directly to brewing use. So from a cost standpoint, we're competitive."
Richard skimmed the chart and nodded.
"And the yeast, the brewing technique?"
"My friend Brian Choi, who's majoring in viticulture and enology at UC Davis, is consulting for us. He runs Redwood Winery and already has a track record of producing a wine that was featured in Wine Review West."
Maggie suddenly broke in.
"I've tasted that wine myself, and he's a very bright boy. He helped us when pests hit our farm too. If my son trusts him, I trust him."
It wasn't exactly a logically airtight answer, but Richard smiled and turned toward Maggie.
"Ma'am, a loan ultimately comes with responsibility. If your son fails, will you be able to shoulder it?"
Heavy as the question was, Maggie didn't hesitate for even a second.
"Yes, I'll shoulder it. I don't believe he's going to fail, and even if he does, my son will never give up. He'll get back on his feet."
In that instant, Jacob felt his throat tighten. 'Never give up' was what his mother had always told him. When his father had collapsed from illness, when a harvest had been ruined, even when the debt collection calls came, she had always said those words.
Maybe, he thought, his mother had come to believe in him even more after he pulled off last year's harvest, the moment that freed her from those debt collection calls.
Richard nodded for a beat, then ran his fingers across the screen of the monitor.
"All right. Using the USDA FSA (Farm Service Agency guarantee) program, a guaranteed loan of up to $750,000 is possible. However, there are conditions. You'll need to document 25% of the initial operating capital as your own equity, and you'll need to submit a revenue projection simulation. Repayment term of 10 years, interest rate in the 6% range per year."
Jacob scribbled rapidly in his notepad. 25% equity. The cash in his hand right now was only a few tens of thousands of dollars. But factoring in Brian and Chloe, and the projected revenue, it wasn't out of reach. No, it was absolutely within the realm of possibility.
Richard set down his pen and said,
"I can't tell you right now whether it's approved, but your paperwork is solid. And..."
He smiled again, this time toward Maggie.
"You've raised your son well. Sending him to California's top agricultural university."
Maggie nodded.
"Yes. My husband was truly proud of this boy. And so am I."
The moment Jacob heard those words, his vision blurred. His fingertips trembled, and somewhere deep in his chest he felt a heat as if something had been held to an open flame.
'I'll succeed, for sure. For sure...'
*****
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