An Introduction to Cannabis Business Loans

The cannabis industry is fast growing and is expected to reach $50 billion by 2026.

However, this industry is grappling with some challenges. There are strict federal government regulations and entrepreneurs are finding it hard to get loans, permits, and licenses.

With the industry’s strict regulations, entrepreneurs can barely find cannabis business loans from major financial institutions such as banks.

But this doesn’t mean that cannabis startups can’t get funding completely. Here is a list of several ways to obtain cannabis business loans.

Things That You Will Always Spend your Time and Money For

Small Business Funding

Small business lending is a wonderful alternative for cannabis business loans. Currently, you can get merchant cash advances meant for the cannabis business.

One remarkable thing about these loans is their quick turnaround time. You can apply for a Small Business Funding cash advance online and receive the money within 24 hours.

Cannabis Investment Groups

Another fantastic way to secure cannabis business funding is through investment groups. The groups are geared towards the cannabis business growth. With the legalization of cannabis, many investors have come up to support the industry by offering the needed financial solutions.

These investors have made it easy for cannabis business people to access financing. However, they tend to offer very high-interest rates with a short-term loan period.

At times, the investors offer loans under the condition of convertible debt. In this case, the lender can convert the loan into an equity stake in the company. Only consider such loans if you’re willing to take the risks.

Purchase Order Cannabis Financing

Purchase order financing is an option that gives cannabis business owners the ability to get capital for paying supplies an upfront fee for any verified purchase orders. These loans take care of financing a portion of the order or the rest of it. It all depends on the funding provider and the order amount.

As soon as the supplier is ready to ship the order, the financing company gets the payment from the customer directly. They’ll subtract their fees and send the remaining balance to your business. These kinds of financing are not typical loans but a form of advance payment.

GUD Capital for Cannabis Business Loans

GUD Capital is a kind of marketplace that connects business owners with direct lenders. The GUD Capital works with cannabis businesses to help them access different kinds of loans. The funding can be private loans, cash advances, equipment leasing, and estate loans.

With GUD Capital, you stand a chance of getting a loan ranging from $5,000 to $20 million, depending on the size of your business. The interest rates of these loans also range from 8% to 25%. To get the GUD Capital, you should get in touch with a representative or make an online application.

Friends, Family, Partners, and Self-Funding for Cannabis Business

You don’t have to apply for a loan to get cannabis business funding. According to an article by Jasdeep Singh, you can finance your business from your pockets. If you use your own money, you avoid all the complications that come with applying for loans.

Due to the difficulty in securing funds for investing in the cannabis industry, self-financing seems like the best option. But that’s only if you have enough money to plow into the business.

Another perfect alternative is raising the needed funds from trusted friends and family. You can also consider taking a partnership from people interested in joining the lucrative cannabis business. All these financing options are easy to get and have no crazy interest rates and fees.

Invoicing for Cannabis Business Loans

Invoice financing is another great funding option that has helped cannabis entrepreneurs stay in business. With this kind of funding, you don’t have to wait for your invoice for a long time and risk halting most of your business operations.

The advances pay for any outstanding balances so the business can maintain its cash flow. These kinds of financing are highly affordable and range from 1% to 2.5% fee of the value of the invoice.

Venture Capitalists for Cannabis Financing

If you’re ready to give out a large amount of equity in exchange for big financing amounts, then venture capital will work for you. The VCs invest a pool of money from individuals and companies into your business. The lenders ensure your business flourishes by giving you access to good financial support in exchange for equity.

Because of the growing cannabis industry, more and more VCs are willing to finance the businesses. The investors believe that the cannabis business market is large enough and worth taking the investment risks. The willingness to take the risk is a huge relief for cannabis business owners who can now access the needed financing.

Crowdfunding

Crowdfunding is now a popular way of raising funds for cannabis businesses. Kickstarter and Indiegogo are the leading crowdfunding platforms.

Crowdfunding has stepped in to promote the cultivation and production of cannabis by offering funds that would have otherwise been unavailable.

Apart from boosting production, crowdfunding also aims to break the monopolies currently running the show. When small business owners receive funding, they will detach the industry from over-reliance on a few companies.

Cannabis Funding Is Taking a Positive Turn

While the cannabis industry is young and has many regulations, you can’t turn a blind eye to the growth it continues to portray. With the industry proving to be a lucrative one, many investors are willing to take the risk of providing the needed funding.

Even though many startups are still struggling to get cannabis business loans, there’s hope that this will change in the future. If the federal government shifts its stance on the handling of cannabis capital, the cannabis business might turn out to be the next big thing.

Read our other posts to learn more about cannabis products.

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