Cannabis Business Loans that Support Your Business

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Contributor, Benzinga
January 4, 2023

As a cannabis business owner, you understand that you need the right conditions to see your company thrive and grow. A cannabis business loan can give you the working capital you need to develop your business and remain competitive in an increasingly competitive industry. 

But many cannabis entrepreneurs discover that their lending options are limited. Here’s what you need to know about cannabis loans and how to secure funding to expand your business.

How to Obtain a Cannabis Business Loan

Gaining access to working capital can help you stay flexible, adapting your business to customer or industry demands. The steps you’ll take to obtain a cannabis loan include:

1. Build a New Business Plan

You may have created a business plan when you first launched your cannabis business. But you should always make sure your plan is up to date. This will keep you focused on your strategic goals and help you and your lender understand where the money will go. Companies like Canna Business Resources help cannabis businesses stay ahead of the curve with the help of their remarkable resources.

The U.S. Small Business Administration (SBA) recommends that every business plan contain the following:

  • Executive summary (summarizes the rest of the plan)
  • Description of your company
  • Market analysis
  • Organization and leadership structure
  • Description of products or services
  • Marketing strategy
  • Funding needs
  • Financial projections

The latter is particularly important because your funding needs and financial projections will influence the amount you apply for.

2. Find a Lender

You may already know that traditional banks don’t work with cannabis businesses. But did you know that you have other options to obtain cannabis financing? Many nontraditional lenders have stepped forward to fill this gap, offering loans that can assist you with the costs of maintaining or growing your cannabis business.

Just make sure you compare rates between multiple lenders, as terms and interest rates can vary considerably. Having a solid business plan and a strong credit score can help you obtain the best rates and terms. Companies like Canna Business Resources can help you get the funding you’ll need for your business to grow.

3. Consider Taking on a Business Partner

Is your credit score on the low side? The best cannabis business loans go to borrowers with a credit score of 670 or higher. If you’re below that, you can strengthen your credit by working with a business partner. 

Not only will you increase your chances of securing a loan, but your combined resources and abilities can augment your business and increase your operational efficiency.

4. Consider Social Equity When Seeking a Loan

Consider looking into a social equity lending program. These programs are designed to assist financially disadvantaged cannabis entrepreneurs. Some companies offer support in order to meet their environmental social governance (ESG) criteria, offering financing that supports a niche business. 

The eligibility criteria for these programs varies by state, and in California and some other states, social equity lending programs are further differentiated by local communities.

5. Consider Alternative Financing

The above options are hardly exhaustive. You might also consider nontraditional financing such as:

  • Crowdsourcing
  • Angel investors
  • Personal savings

Just be aware that most crowdsourcing platforms take a small cut of your funds as payment, but otherwise, they can be a useful way to solicit funds from your supporters.

What Do Cannabis Business Loans Cover?

Cannabis business loans are surprisingly flexible. You can use this capital for a variety of business needs, though your lender may want to know where the money is going before approving the loan. Here are some common expenses you can cover with a cannabis loan.


Keeping your employees happy often requires a competitive salary and benefits package. A cannabis loan can give you the working capital to keep your workers engaged.

Real Estate

Business loans can provide funding to purchase commercial real estate. Existing entrepreneurs can use these loans to purchase larger properties or obtain storage space to maintain their businesses.

Retail Expansion

To scale your business, you may require additional retail space or additional equipment. You might also open multiple locations as your business grows. You can fund these needs with a cannabis business loan and continue to develop your business.

Research and Development of New Products

The best businesses are constantly refining their core products, and the cannabis industry is no different. With the right funding, you can introduce additional products through your business, which can give you a competitive edge.

Considerations with Cannabis Business Loan

Before jumping into a loan program, Cannabis business owners should consider the following: 

Not Many Traditional Options

Most banks won’t work with cannabis businesses. You’ll need to work harder to find a cannabis funding option that’s right for your business.

Generally, There Are Higher Interest Rates

Strong competition means that cannabis lenders charge higher interest rates. These rates can make it harder to repay the loan, so plan accordingly.

Consider Loan Durations 

How long are you willing to stay in debt? Consider this question carefully as you evaluate loan durations. Some lenders charge penalties for early repayment, so you may have to carry the debt for the loan’s duration.

What Is the Repayment Plan?

Can your operating budget cover your monthly loan payments? Before you commit to a loan, make sure you can integrate this added cost into your budget.

Thrive in a Budding Industry

Cannabis loan options can be hard to come by. But if you stay persistent, you can find a lending program that aligns with your business goals. With the right planning and strategy, your cannabis business can stay agile and competitive for years to come.

Frequently Asked Questions


Can cannabis companies get bank loans?


Most traditional banks do not offer lending options to cannabis companies. To obtain funding, you’ll need to look into a lender specializing in cannabis lending options.


Does the SBA finance cannabis companies?


While SBA 7(a) loans are the gold standard of small-business loans, cannabis companies are not eligible. Again, you’ll have to consider alternative funding options from cannabis lenders or the options listed above.


Is cannabis a profitable business?


The Securities and Exchange Commission reports that in 2019, cannabis businesses pulled in more than $12 billion in revenue. These profits are expected to increase to $31.1 billion by 2024.