Choosing the Best Cannabis Business Loan Program
The $10 billion Cannabis Industry is growing fast with expectations of up to $50 billion by 2026. The cannabis businesses and marijuana industry is composed of legal cultivators and producers, consumers, independent industrial standards bodies, ancillary products and services, and its industrial derivative, hemp. Cannabis business owners have been inhibited by federal government regulatory restrictions on both medical and recreational use of marijuana for most of recent history, but the legal marijuana business market has emerged rapidly as more governments legalize medical and adult-use of marijuana, hemp, and other cannabis products. Cannabis lending has followed the trend.
A Breakdown of the Cannabis Industry:
- Recreational Marijuana (3.2 Billion)
- Medical Marijuana (5.1 Billion)
- CBD Oil (202 Million)
- Hemp (820 Million)
Cannabis Businesses We Fund:
- Cannabis & Hemp Growers
- Marijuana-Infused Products
- Wholesale and Manufacturer’s
- Retail Marijuana Dispensary
- Medical Marijuana Products
- Cannabis Accessories
- Hemp Products
The cost of running Cannabis businesses are steep, and to make matters worse, the ability to get loan to grow can be difficult. It all begins with the fact that the Cannabis industry on a federal level is not accepted. Traditional Banks and other lenders, in many cases, operate on and are subject to federal banking laws that make funding that deals in cannabis impossible. Tell them your looking for dispensary loans and see what happens. So, it’s a non-starter if you walk into a bank looking for small business loans.
The good news, there are a few alternative business lenders and funding options for small businesses in the cannabis space, which include the AdvancePoint Capital marketplace, that has filled in the void in funding cannabis-based businesses.
Reasons for Getting a Cannabis Loan: What Are the Most Common Uses of Loan Proceeds from Cannabis Business Financing?
- Working Capital
- Equipment Financing
- Cannabis Biotechnology
- Cultivation, Growing and Farming
- Hemp & CBD Products
- Marijuana Product expansion
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AdvancePoint Capital makes the loan application process a simple, straightforward experience.
What Types of Cannabis Business Loans are Available?
Business Cash Advance for Cannabis Financing
Business Cash Advance, also known as Merchant Cash Advances, are not loans, but an advance by the purchase of future receivables for a lump some now. This product is repaid by a set percentage of future sales.
Cannabis (Commercial Real Estate Collateral Based) Equity Financing
Commercial real estate loans can leverage the equity of the property for lending. Due to cannabis, an alternative lender, and not an FDIC insured bank, provides this type of cannabis business loans. Be prepared to provide document support and details about the real estate that is involved. A real estate appraisal will be needed.
Invoice factoring is a great solution for businesses that invoice regularly there clients with terms that are net 30 to net 60 to repay. This is an advance off an unpaid invoice. Great for improving cash flow.
Purchase Order Financing
Purchase order financing improves the entire cannabis supply chain by obtaining the funds necessary to acquire the supply to sell and improve purchasing power.
How to Prepare for Business Funding
In order to acquire cannabis loans and other alternative financing solutions the owner must be prepared. Let's review what needs to be addressed prior to applying.
Business Plan-Make sure you have a clear description of your activities. A robust website is a great way to convey what you do, how you operate, do you comply with State law related to the marijuana business and who leads the organization.
Credit Score- Make sure all owners have checked there credit history and credit score. See if there is anything you can do to improve credit score before applying.
Cash Flow- How are you managing cash flow? Are the bank statements always cash flow positive and healthy reserve balances? Are you managing ongoing expenses? What are you annual sales? Are current sales at pace or growing month to month?
Supply Chain-Do you have good relationships with the entire cannabis supply chain?
Business Needs - Make sure you know the reasons you need money.Needs may include, but not limited to; equipment financing to purchase new equipment, working capital loans (more money yes, but what do you need working capital for?), a revolving line to support cash flow short falls or purchasing power, or a term loan for a large expansion. These are important questions.
Financing Solutions- When look at financial solutions ask questions and find out what financing options are available for the cannabis industry. Financial solutions will vary in the cannabis industry with a variety of loan options its not as simple as a basic cannabis loan.
Advice, Tips, Warnings about Cannabis Business Financing
Like any other loan product, it starts with asking the question, why? What are you using the money for? Do you need equipment financing?(equipment leasing vs. equipment loan) Are you looking at financing because you were declined for more traditional options? How does getting financing help? Did you use a cost versus benefit analysis? What are interest rates? Make sure that you’re asking all of the questions and looking for the right answers when deciding between business loans and other funding products. Marijuana businesses have less options than other traditional businesses so choose your financing options carefully.
How to Apply for Cannabis Business Financing
AdvancePoint Capital offers an easy cannabis business loans that can help answer any questions you may have. Our customers love the fast, streamlined process and high approval rates due to options available that come from working with us — and their businesses are thriving because of it. Let us help you find funding.
Applying with AdvancePoint Capital is as simple as a 1, 2, 3 process. Start with this online form, then fill out the short application page, wait a few hours for your approval, and then get your money!
The fast, convenient, and straightforward way to get the business loan you need for your business – now!
Get your quote today by filling out our simple form.