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                                                                  EXHIBIT 10.16

                   AMENDMENT NO. 2 TO BUSINESS LOAN AGREEMENT
                                       
     This Amendment No. 2 (the "Amendment") dated as of December 19, 1996, is
between Bank of America NT & SA (the "Bank") and Portland Brewing Company (the
"Borrower").

                                   RECITALS
                                       
     A.   The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of December 15, 1995, as previously amended (the
"Agreement").

     B.   The Bank and the Borrower desire to further amend the Agreement.

                                   AGREEMENT
                                       
     1.   DEFINITIONS.  Capitalized terms used but not defined in this
Amendment shall have the meaning given to them in the Agreement.

     2.   AMENDMENTS.  The Agreement is hereby amended as follows:

          2.1  Subparagraph 2.1 (b) of the Agreement is amended in its entirety
to read as follows:

               This is a non-revolving line with a term repayment option and
               with a with-in line for leasehold improvements.  Any amount
               borrowed, even if repaid before the end of the availability
               period, permanently reduces the remaining available line of
               credit.
               
          2.2  Paragraph 2.3 of the Agreement is amended in its entirety to
read as follows:

               2.3  PURPOSE.  Each advance shall be used to finance the
               acquisition of new equipment for use in Borrower's business and
               for leasehold improvements.  All equipment acquired and
               improvements performed with the proceeds of such advances shall
               be free and clear of any security interest, liens, encumbrances
               or rights of the others except the security interests of the
               Bank under any security agreements required under this
               Agreement.  Each request for an advance shall be accompanied by
               a copy of the purchase order or invoice for new equipment to be
               purchased or for improvement to be done with the proceeds of the
               advance.  The amount of each equipment advance shall not exceed
               80% of invoice cost.  The amount of each leasehold improvement
               advance shall not exceed 55% of invoice cost.
               
          2.3  Subparagraph 2.5(b) of the Agreement is amended in its entirety
to read as follows:

               The Borrower will repay the principal amount outstanding on 
               the Expiration Date in 84 successive equal monthly 
               installments starting June 1, 1997.  On May 1, 2004, the 
               Borrower will repay the remaining principal balance plus any 
               interest then due.  The Borrower will repay the principal 
               amount outstanding under the leasehold improvement with-in 
               line on the Expiration Date in 48 successive equal monthly 
               installments starting June 1, 1997.  On May 1, 2001, the 
               Borrower will repay the remaining principal balance of the 
               leasehold improvement with-in line plus any interest then due.

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          2.4    Paragraph 2.9 is hereby added to the Agreement as follows:

               2.9  LEASEHOLD IMPROVEMENTS.  During the availability period,
               the Borrower may request leasehold improvement loans from the
               Bank in a total principal amount not to exceed Two Hundred
               Seventy One Thousand Dollars ($271,000).  Each leasehold
               improvement loan made by the Bank will permanently reduce the
               amount of Facility No. 2 Commitment available under this line of
               credit for extensions of credit other than leasehold improvement
               loans.
               
          2.5  Subparagraph 5.1(a) of the Agreement is amended in its entirety
to read as follows:

               Machinery, equipment, leasehold improvements and fixtures.
               
          2.6  Paragraph 7.4A is hereby added to the Agreement as follows:

               7.4A CONSENT TO REMOVAL.  For any personal property collateral
               located on real property which is subject to a mortgage or deed
               of trust of which is not owned by the Borrower, a Consent to
               Removal from the owner of the real property and the holder of
               any mortgage or deed of trust.
               
     3.   EFFECT OF AMENDMENT.  Except as provided in this Amendment, all of
the terms and conditions of the Agreement shall remain in full force and
effect.

     This Amendment is executed as of the date stated at the beginning of this
Amendment.

BANK OF AMERICA NT & SA            PORTLAND BREWING COMPANY


x Ed Kluss                         x  Charles Adams
-----------------------            --------------------------
By:  Ed Kluss                      By:
Title: Vice President              Title:    Pres.


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