Key takeaways
- You need a local liquor license from your city, village, or county before you can get your state license from the ILCC.
- Beer must be paid for in cash on or before delivery. Wine and spirits can be bought on up to 30 days of credit.
- Retailers delinquent beyond 30 days go on the ILCC's delinquency list, and no supplier may sell to them until they're cleared.
- Illinois licenses aren't property and can't be transferred or encumbered. A buyer gets new licenses, and lenders can't take the license as collateral.
At a glance
- Regulators
- Your local liquor commissioner + Illinois Liquor Control Commission
- Order of licensing
- Local license first, then state license
- Beer payment
- Cash on or before delivery
- Wine & spirits
- Up to 30 days of credit
- If you pay late
- Placed on the ILCC delinquency list
- License transferable?
- No. A license is a personal privilege, not property
Summary of state rules as of the date above. See sources below.
In Illinois, the state license is the easy part. The real gatekeeper is your local liquor control commissioner, usually the mayor or village president, who decides whether your store gets licensed at all. Combine that with cash-on-delivery beer and a weekly delinquency list, and Illinois owners have their own set of financing considerations.
How liquor store licensing works in Illinois
Illinois uses a two-layer system:
- Local license first. You apply to the local liquor control commissioner for your city, village, or county. Many municipalities cap the number of licenses in each class by ordinance, so a new store may require the local board to create a license before one can be issued.
- State license second. With the local license in hand, you apply to the Illinois Liquor Control Commission (ILCC) for a state retailer's license.
- Chicago. Chicago issues its own packaged goods licenses, and the local alderman plays an influential informal role. Parts of the city have also used moratoriums that restrict new package goods licenses, so check your exact address before signing a lease.
Under 235 ILCS 5/6-1, an Illinois liquor license is a personal privilege. It isn't property, and it can't be transferred, encumbered, or hypothecated.
Illinois distributor payment rules
Section 6-5 of the Liquor Control Act sets two very different rules:
| Product | Rule |
|---|---|
| Beer | Paid by the retailer in cash on or before delivery |
| Wine and spirits | Merchandising credit in the ordinary course of business for up to 30 days |
Every week, suppliers must report to the ILCC each retailer that's delinquent beyond the 30-day credit period on wine or spirits. A retailer on the delinquency list can't buy or receive alcohol on credit or otherwise from any licensee until it's cleared, and the Commission notifies the retailer when it's added.
What this means for your cash flow
A beer-heavy Illinois store, especially in summer, is funding every beer delivery with cash on the spot, while still paying wine and spirits bills within 30 days. Owners who use a line of credit to smooth beer purchases can keep enough cash to stay off the delinquency list.
What Illinois rules mean for financing
Buying a store
Because licenses can't be transferred, buying an Illinois liquor store means the buyer applies for new local and state licenses. Closing depends on the local commissioner approving you, not just the deal terms. Make your purchase agreement contingent on licensing, and expect your lender to fund only once the local license is approved or clearly on track. See acquisition loans.
Collateral
Since an Illinois license can't be encumbered, lenders don't count it as collateral. They underwrite the store's cash flow, equipment, inventory, real estate if any, and personal guarantees.
Opening a new store
For a startup, the first question is whether your municipality has, or will create, a license for your location. Get that answer before you commit to a lease or a build-out. See startup loans.
Financing options for your store
| If you need to… | Look at |
|---|---|
| Cover distributor bills, payroll, or a slow month | Working capital loans |
| Stock up ahead of the holidays | Inventory financing or a line of credit |
| Replace a walk-in, compressor, or POS | Equipment financing |
| Get off daily cash-advance debits | Refinancing |
| Buy an existing store | Acquisition loans (usually SBA 7(a)) |
Frequently asked questions
Do I need a local or state liquor license first in Illinois?
Can Illinois liquor stores buy beer on credit?
Can I transfer an Illinois liquor license when I sell my store?
Sources
We cite primary sources: federal agencies, regulations, and official program rules. Rules vary by state and change over time.
General education, not legal, tax, or financial advice. Loan programs, state alcohol laws, and lender requirements change and vary by state. Disclosures.