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Introducing: The New CannaBusiness Financing Solution!
It’s high time you fund a better way to grow. National Business Capital made the dream of streamlined cannabis financing (without equity investments) a reality with the new CannaBusiness Financing Solution! This new CannaBusiness Financing Solution is the leading cannabis-specific financing product on the market, and it’s here to help you grow your business right away, and without any hassle. Medical marijuana is legal in 33 states, and recreational marijuana is legal in 11 states and Washington D.C. Nonetheless, aspiring cannabis entrepreneurs still have difficulty in obtaining financing. Tearing down industry lending barriers, this new program is helping aspiring cannabis entrepreneurs like you to avoid roadblocks, like inevitable bank loan application denials. This new program is available to all subsets of the industry, including:- Biotechnology
- Cultivation, growing & farming
- Hemp & CBD products
- Marijuana products
- Consumption devices
- Cannabis-specific marketing and business development agencies
- Other ancillary cannabis companies
Can I Get a Bank Loan for a Cannabis Business?
Unfortunately, you can’t. Banks tend to be the first stop along the road to funding for many small businesses, cannabusinesses included. The primary reason behind this is that they can offer the lowest rates in the form of an SBA loan, the ideal option for business owners across many industries. Banks can afford to offer low SBA loan rates because the funding is insured by the federal government. But because cannabis is federally illegal, it’s not possible to insure these SBA loans. Federal regulations also prevent banks from offering term loans. These regulations don’t only apply to marijuana businesses, but across the cannabis industry. As a result of the 2018 Farm Bill being passed, CBD became federally legal. However, it wasn’t a simple or clean transition— policy makers and financing companies alike are still working to read between the lines and come to a consensus regarding whether or not it’s possible to get a bank loan for a CBD business. On paper, CBD and hemp businesses are legal— but lack of a clear definition and guidelines are holding these businesses back. But regardless of what the future holds if banks are able to issue cannabis loans, they may not always be the best option. Cannabis entrepreneurs will still have to contend with the difficulty that business owners often face when dealing with banks. First and foremost, there’s no guarantee they’ll be getting the best deal. Banks are notorious for inconveniencing business owners by taking forever to issue financing. There’s often a several-month waiting period, and no guarantee they’ll eventually qualify. Not to mention, hours worth of clerical work that simply comes with the territory. Given the fast pace of the industry, speed is the name of the game. Waiting around for too long to receive your cannabis business loan could mean allowing another business to steal your idea, and disrupt the market before you have a fighting chance.What About Accepting Private Equity for Cannabis Funding?
In your search for cannabis business funding options, you might come across private equity financing. Private equity means any investors who put money into your cannabis business, with no promise of repayment in the future. Private equity financing can be a simple short-term solution. But unfortunately, private equity financing can create more problems than it solves. By selling a stake of your company to a private investor, you’re diminishing your reward for the long run. It’s true that you won’t have to pay back the investor for the cannabis capital they contribute. Instead, you’ll commit to paying the investor for a percentage of the profits— forever. It’s a viable option for short-term financing, but it also wipes away many of the rewards that motivated you to start a business in the first place.How Alternative Lending Solves the Cannabis Business Loan Problem
If banks and equity financing don’t solve the problem, then where should you turn for cannabis financing? Alternative lenders have filled the void by providing cannabis business loans. Many participate in online lending, making financing simple and quick. As they are not backed by banks or the federal government, alternative lenders are not beholden to the same rigid regulations. If you’re in a state where cannabis is medically or recreationally legal and looking to grow your business, this is the perfect route to get there.Cannabis Business Funding Options
Instead of choosing the first loan you qualify for right off the bat, you can learn about multiple cannabis business loan options, like:- Cash Advance: This financing solution allows you to borrow against future receivables.
- Equipment Financing: Get the quick financing you need to purchase equipment that helps you grow or expand your cannabis business
- Credit Score: A credit score around the 650 range can help you qualify for the optimal deal. But don’t worry— if your credit score isn’t quite up to par, you can still qualify for a financing program.
- Time in Business: Traditional lenders prefer to lend to businesses that have been around for a long time (at minimum 1-2 years). But with alternative lending, your business only needs to have been around for a minimum of 6 months. If you’re just starting to get things off the ground, then you can still push your business in a positive direction.
- Minimum Sales: To ensure that you’ll be capable of paying back the loan, many lenders will only consider giving you a business loan if you’re profitable. Through alternative lenders, all you need for most programs is $120K in annual sales!
How a Cannabis Business Loan Helped a Tacoma Dispensary Bloom
Cannabis funding has already helped companies across the country to take shape and blossom. In fact, a Business Financing Advisor at National had a hand in helping a Tacoma, Washington dispensary grow.Jumping Minor Hurdles to Accomplish Major Feats
The dispensary had been around for a while, and like other businesses in the cannabis space, had experienced some success due to the rapidly growing market. However, before pushing the needle forward, the owner recognized that he needed to settle some tax issues. But current profits and volume unfortunately made that impossible. After getting in contact with a Business Financing Advisor at National, the dispensary owner was able to address this issue right away. He qualified for a 650K business loan, and opted to take 425K in order to settle the tax issues his business faced once and for all. With tax issues taken care of, the dispensary was able to turn the lights on high and work to earn even higher profits!Putting Growth Into High Gear
As things continued to move along, their business steadily grew, paving the way for future expansion. A few months down the line, they had made such a name for themselves that they realized having a single location was limiting their success. In order to cash in on all of the opportunity at hand, they realized they needed to open a new location. Which is exactly what they did. Profits were good, but not good enough to cover all of the expenses involved in a new location. After touching base with the Business Financing Advisors at National, they were able to receive a second round of funding. With $750K on their hands, they had more than enough capital to cover all of the expenses involved in opening a new dispensary, like:- A new storefront
- A team of new employees (including time spent training)
- A store’s worth of new inventory
Get Cannabis Business Funding in 24 Hours
At National, our team makes getting the best deal on a business loan as simple and quick as possible. After filling out the 60-second application, our team of Business Financing Advisors will contact you to learn more about your goals and answer any questions you have. Then, we’ll find the financing options that make the most sense for your business in our network of 75+ lenders. Contact us today to reach new heights in your cannabis business!ABOUT THE AUTHOR
Joseph Camberato is the CEO & Founder of National Business Capital, where he has led the company in funding more than $3 billion for growth-minded businesses since 2007. With firsthand experience building NBC from a startup into a national private lender, Joe writes on the economic forces shaping access to capital, including interest rate shifts, private credit trends, and the challenges mid-sized companies face when banks pull back.
