HAMPTON -- Funds from a $500,000 Community Development Block Grant will help Smuttynose Brewery Co. with its move from Portsmouth to a larger, state-of-the-art facility in Hampton.

The N.H. Community Development Finance Authority approved the federal grant award to Rockingham County on behalf of the Coastal Economic Development Corporation. The CEDC intends to loan the capital to the Smuttynose Brewing Co., which will pay the money back to the organization with interest.

"It's one more piece in what turned out to be a very complicated package of financing for the project," said Smuttynose Brewery President Peter Egelston. "We are borrowing the money, and once it gets paid back, it will be able to be re-lent for other economic projects. It's a great program as far as an economic stand-point, and we are very proud to be participating in it."

Egelston said Smuttynose Brewing has already secured financing for the construction of the new Towle Farm Road facility, scheduled to be completed in 2013.

The Community Development Block Grant loan will be used to help purchase necessary equipment, including three new brew tanks, for the new facility. The money will help the brewery double its operational capacity and is expected to create 25 new jobs.

"There are few New Hampshire brands with higher name-recognition than Smuttynose," said Kevin Flynn, CDFA communications director.

"CDFA is proud to be the final piece in the company's financial package that will create a wonderful economic benefit for the Seacoast."

The CDBG program funds provide housing and create jobs primarily for low-and moderate-income people. Funds are provided to the state of New Hampshire by the U.S. Department of Housing and Urban Development, and administered by CDFA. Each project is evaluated on several criteria, including impact on low- and moderate-income residents and the acquisition of matching funding.

As part of the loan agreement, Smuttynose must create 25 new jobs, of which 60 per-cent will be available to people with low or moderate incomes.

Egelston said that shouldn't be a problem. "We are expanding our production, so we will be adding new employment -- everything from additional sales staff to new brewers," he said. "We will also be opening a new restaurant."

The grant requires final confirmation from the Executive Council. "Financing projects of this magnitude are very complex and often require a lot of partners," Flynn said. "For nearly 40 years, the Community Development Block Grant program has provided that gap financing to support keystone economic projects that create new jobs."

Egelston said construction of the new facility is progressing. "We are expecting to be moving into our new facility at some point in late 2013," Egelston said.

The new location will feature a 42,000-square-foot production facility for on-site brewing and bottling, as well as a 95-seat restaurant.

The project includes many conservation measures, including preserving and repurposing two historic buildings on the property, a high-efficiency waste treatment system, and other energy efficiency measures. The new building is in line for gold certification in the Leadership in Energy and Environmental Design program.