Financing Options for a Cannabis Business
Recreational marijuana is legal in 11 states including Washington D.C. and medical marijuana is legal in 29 states. Still, aspiring growers are facing difficulty in obtaining finance to start off.
Cannabis is an emerging industry in the US. Herein, we are sharing a few financing options for your cannabis business:
Types of Cannabis Business Financing
Fortunately, there are various cannabis business loan options available out there other than traditional bank loans.
1. Specialist Financing
Many lenders offer various alternative financing including cannabis business loans. These companies are familiar with the working and programs of the cannabis industry. Also, they can guide you to navigate federal rules and regulations.
2. Cannabis Equipment Financing
Equipment financing gives you the ability to buy or borrow the required physical assets for your cannabis business.
You can easily apply the loan for cannabis equipment such as:
- HVAC units
- Computers and software
- Marijuana lighting equipment
- Lab equipment
- Security equipment such as alarms, video surveillance, and digital storage
- CO2 extraction systems
- Transportation vehicles
3. Bridge Loans
Bridge loans are fast business loans. They are temporary and short-term specially used to secure permanent financing. It usually is backed by some kind of assets or collateral such as inventory, equipment, or real estate.
Benefits of bridge loans:
- faster than a traditional long term loan
- no penalty on pre-payment
- flexible repayment options
4. Business Lines of Credit
The business line of credit (LOC) gives access to the capital for paying for the day-to-day running costs. The best part of LOC is that there is no need to withdraw the loan amount, all at once.
You can use the small amount of money instead of using it altogether and you only need to pay the interest on the amount withdrawn.
5. Cannabis Real Estate Loans
Cannabis real estate loan is a type of secured loan that can apply to finance the real estate or land for constructing cannabis dispensaries.
This type of loan comes with various benefits such as controlling overhead costs, tax advantages, asset appreciation, and more.
Who Can Secure Cannabis Financing?
People who are involved in growing, producing, selling and other cannabis-related businesses can secure cannabis business loans.
- Medical marijuana practices
- Fencing businesses
- Greenhouse sellers
- Greenhouse manufacturers
- Cannabis equipment sellers
- Hemp processors/distributors
Alternative Cannabis Business Funding Options
If you are not eligible for a traditional loan, check out the alternative cannabis business loan options:
1. Credit Score
If you can improve your credit score, you qualify for an optimal deal. 650 is considered a good credit score.
2. Cash Advance
It is one of the best financing solutions that allow you to borrow against future receivables.
3. Minimum Sales
Most lenders consider your profitability while lending to ensure that their money is safe and you are capable of paying back the loan.
4. Experience in Cannabis Business
Many traditional lenders prefer businesses that have been around for at least 1 to 2 years. But alternative cannabis business loans can approve your loan even if you have only 6 months of experience.
The guidelines for alternative cannabis business funding can vary from lender to lender.
At Royale Funding, you can get multiple loan options to ensure that you start a cannabis business without worrying about funds.
Contact us 703-399-1685 to take your cannabis business to the next level.