Best Cannabis Business Loans

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Contributor, Benzinga
Updated: December 16, 2022

As the owner of a cannabis business, you may be wondering what financial products are available to you. Fortunately, there are quite a few business loan options that can help with most aspects of running a business. The important thing is to work with a lender who can act as a partner and allow you to grow your business. 

Best Cannabis Business Loans

Not all lenders will finance cannabis businesses, but that doesn’t mean that there aren’t good lenders available to you. These lenders understand the cannabis industry and the financial products that can be the most beneficial to cannabis businesses.

Canna Business Resources

Think of Canna Business Resources as a one-stop shop for all the financial support your cannabis business needs. The firm offers specialty cannabis loans, helping you kickstart your dispensary, distribution firm, growing company, expand, manage new projects, handle payroll, etc. 

Working capital loans from Canna Business Resources require no proof of revenue, tax returns or pay stubs. The firm simply reviews business income, credit ratings, bank deposits per month and other factors. In short, you’re not considered “risky” just because you work in the cannabis industry. You have a lending partner in Canna Business Resources, and you work with a personal business advisor who will steer you toward a loan that is perfect for your company. 

Finally, Canna Business Resources makes it possible for small businesses to get started in their respective communities. While you may feel the community needs a cannabis or CBD dispensary, you can grow on your land or you have industrial space that lends itself to production or distribution, it can be hard to obtain funding. That is why you look to Canna Business Resources to learn what is possible.

Upwise Capital

Upwise Capital is knowledgeable about the cannabis industry and lends based on cannabis value. The company offers personalized experiences and a quick application process. Upwise also offers transparent terms and automatic payments for its cannabis business loans. 

There are quite a few loan options to choose from if you work with Upwise. This includes:

Cannabis working capital loan: Also known as a bridge loan or merchant cash advance, this product is technically not even a loan. It provides your business with a cash advance in exchange for a percentage of your daily sales or monthly revenue. 

Cannabis equipment financing: This product from Uprise can help you finance up to 100% of the equipment needed for your business. 

Cannabis real estate financing: A real estate loan or cannabis asset-based loan is secured by your business assets. Typically, assets are the business’s real estate, but accounts receivable, land, purchase orders, inventory and equipment can also be used as collateral. 

Cannabis sale-leasebacks: This product allows you to sell your real estate to Uprise in exchange for cash to use for operational costs. After you sell your real estate, Uprise will lease it back to you so you can continue to use it for your business.

Each loan product has its own eligibility requirements, but you can generally expect to provide business bank statements, an executive summary of the business and other documents to secure funding. Once your application is approved, you can receive funds from Uprise as soon as the same or next day. 

Bespoke Financial

Bespoke Financial was founded in 2018 and became the first licensed commercial lender with a focus on the cannabis industry. The company focuses on an outside-the-box approach to help cannabis businesses work around financial obstacles. This includes short-term financing to help cannabis businesses focus on scaling for the future. 

The application process for any of Bespoke’s products is fairly straightforward. You can apply for the financing product of your choice online and receive a decision within one week of completing the application. All of Bespoke’s banking partners are compliant with cannabis regulations, so you don’t have to worry about unexpected interruptions in coverage. 

Bespoke’s products include:

Line of credit: The revolving line of credit allows businesses to draw down capital to use on their own. Alternatively, businesses can request that Bespoke pay vendors on their behalf. This product gives your business the freedom to use their money to pay for renovations, pay taxes and more. As your business grows, you can increase your line of credit as needed, as long as your account is in good standing.

Inventory financing: With Bespoke’s inventory financing, your business can buy larger quantities of products at lower costs to increase profits. Businesses that are approved for inventory financing can have Bespoke pay vendors directly. 

Purchase money financing: Bespoke’s purchase money financing allows cannabis businesses to receive an advance on 100% of raw material purchases. This can help your business ensure that it can fulfill orders, even if you don’t have the capital on hand to do so on your own.

Invoice financing: Invoice financing can help businesses avoid the capital strains of waiting to receive payment on open invoices. Instead, Bespoke can provide your business with an advance of up to 75% on eligible accounts receivable invoices.

Dispensary financing: Bespoke’s dispensary financing is specifically designed to help dispensary businesses grow. This type of financing provides a loan that is secured by your inventory. It allows you to receive 60-day repayment terms, buy in bulk and pay your vendors on delivery to access discounts.

GoKapital Inc.

GoKapital was not founded with the cannabis business in mind but because of a desire to address obstacles facing small and medium-sized companies. GoKapital serves several industries, including the cannabis industry. 

It offers cannabis business loans with fewer qualifications than most banks, making it easier for cannabis businesses to acquire financing. Its Quick Business Loans range from $50,000 to $5 million. These loans are not originated by an Federal Deposit Insurance Corps. (FDIC)-insured bank, which allows GoKapital to serve alternative businesses such as those in the cannabis industry. 

GoKapital also offers a Business Cash Advance product for cannabis businesses. To qualify, you must have had your business for more than four months, have a FICO score of over 500 and have annual sales of over $150,000. After submitting an application, you can expect a quick response about your approval. In fact, you may even receive approval within 24 hours of submitting your application, after which you would have immediate access to your funds. 

Other products offered by GoKapital as well include a business line of credit and startup business loans. You can work with a GoKapital loan consultant to receive a free consultation to help you learn about the options that are best for your business.

AVANA Capital

AVANA Capital was founded in 2002. While it was not created to solve problems surrounding cannabis business loans, it’s able to do so now. The company prioritizes a quick closing process for its cannabis loans to allow owners to get their businesses up and running as soon as possible. If you’re seeking a business loan for your cannabis business, you can contact a cannabis loan expert to discuss your business and financing options.

One of the loans AVANA Capital offers its cannabis customers is the construction and real estate loan. These loans are customizable and can be flexible to allow for low down payments and quick closings. Additionally, you can include fees in the loan so you’re left with more capital to invest into your business products. Another benefit of this financing solution is that AVANA Capital offers floating interest rates and refinancing options.

The other product that AVANA Capital offers for cannabis businesses is the bridge loan. These loans offer interest-only payment plans for up to three years and come with competitive rates. They also offer construction down payments ranging from 10% to 30% and refinancing options.

Benefits of Cannabis Business Loan

There are several great reasons to get a cannabis business loan. As long as you get the right financial product from a knowledgeable lender, it’s hard to go wrong. Some benefits you may be able to expect if you decide to take out a loan include:

Partnership with a lender: Cannabis business lenders can act as your partner in your entrepreneurial endeavors, unlike some traditional banks that may not offer cannabis business lending solutions. 

Potential discounts: Sometimes, working with a cannabis business lender can actually help your business in other ways in addition to providing a loan. For example, some cannabis business lenders have partnerships with equipment manufacturers and distributors. By working with a lender with one of these partnerships, you may be able to get discounts for your business.

Industry experience: Lenders who serve the cannabis industry typically have experience in the industry. This means that they understand the rules and regulations the business must follow. These lenders can also often create customized solutions that are unique to cannabis, hemp or CBD businesses.

Expedite business growth: Oftentimes, taking out a cannabis business loan can help you speed up the growth of your business. The extra capital you gain from a business loan could help you cover startup costs to get you up and running sooner. A loan could also help you build inventory, buy equipment or even free up capital you can use as needed.

Retain control of your business: Typically, businesses have two options when it comes to financing. They can either use a loan or take on investors. There are pros and cons to each option, but when it comes to the cannabis industry, a loan is likely to be the better option. By using business loans instead of investors, you can retain full control of your business as well as the full profits.

Several funding options: There are several ways to approach financing. You could consider getting a personal loan or using a credit card to fund business purchases. However, business loans are usually a better value because the interest rates tend to be lower than the interest rates of alternative products.

Mistakes to Avoid When Taking Out Business Loans

When you take out a business loan, be sure you’re prepared. This includes fully understanding the terms of your business loan. By avoiding these mistakes, you can make the process go much smoother so you can get your funds as soon as possible.

Not being selective: Not being selective about what you can use your funds for. Before you take out a loan, be sure that you have a plan for how to spend the money. Some cannabis business loans may have restrictions regarding what the funds can be used for. In some cases, you’ll also need to explain your plan for the funds when you submit your loan application.

Taking the first loan you find: Making a quick decision instead of comparing lenders. This is true of any business loan, but if you’re operating a cannabis business, you need to be even more careful. Some lenders won’t approve a loan for cannabis businesses, even if you meet its qualifications otherwise. Be sure you’re working with a lender that understands your business’s needs and can work with you long term to help you achieve your goals. 

Not considering risks involved: Not considering the risks is deadly. Risk comes with taking out any loan, and cannabis business loans are no exception. When you apply for a loan, make sure you understand the difference between secured and unsecured loans. If you take out a secured loan, you’ll need to provide assets as collateral. This means that if you cannot make payments on your loan, you’ll face the risk of losing the collateral that you agreed upon when you took out the loan. In some cases, this could mean losing valuable equipment or even losing your business entirely.

Forgetting about your personal credit: Forgetting to focus on your personal credit can be a problem. When you are the owner of a business, your personal credit will likely be taken into consideration if you apply for a business loan. This is true even if your business has been operating for quite a while. Before you apply for a loan, you should be sure your personal credit meets the requirements set forth by the cannabis business lender. If it doesn’t, you should spend some time focusing on improving your personal credit before applying for a cannabis business loan. 

Frequently Asked Questions

Q

How much does a business loan cost?

A

The cost of a business loan depends on several factors. This includes the amount of money you’re borrowing and the type of loan you’re using for your business. Your personal credit score, business history and interest rate are also factors in your final cost. 

Q

How long should a business loan last?

A

The length of your business loan also depends on a variety of factors. The type of loan you take out plays a large part in the business loan repayment term. You may be able to choose from two or more loan term options when you accept a loan. Typically, business loans have repayment terms that last anywhere from six months to five years.