Are you planning to open a cannabis business? If so, you’re in luck—that’s the fastest-growing industry in the US right now! But whether you’re starting a dispensary or an edibles company, you need funding to get started and keep running.
Fortunately, more and more investors are taking an interest in the marijuana industry, meaning that there are plenty of ways to get funding for your business, each with its benefits and drawbacks. Learn about Colorado cannabis business loans and how they work!
How Do I Get A Loan For Cannabis Business?
A person or business offers potential backers certain perks for funding a project with crowdfunding. Some websites allow you to create a fundraising campaign and find money from friends, family, and strangers. For example, if you want to raise $20,000 in startup capital, go online and set up a campaign. You might offer t-shirts and bumper stickers as rewards at different pledge levels. As with all financing strategies, be sure you understand your target audience before launching a crowdfunding campaign.
There are enough options out there if you want to take out a loan to buy equipment. Usually, these loans will cover 80-90% of your startup costs. Once your equipment has been delivered, you’ll settle your borrower on a weekly or monthly basis. The equipment becomes yours once you have made all scheduled payments.
Merchant Cash Advances
Consider applying for a merchant cash advance if you have not been in business for a long time, have a low credit score, and do not qualify for other loan options. A merchant cash advance lets you borrow against future credit card sales, and it’s essentially an uncollateralized line of credit. You will receive a lump sum from the lender, plus a factoring fee; other fees may also apply. Until you repay the loan balance and fees, the lender will withdraw money regularly from your account.
Lines of Credit
Financing through a line of credit is flexible. However, A line of credit doesn’t provide you with one lump sum. Instead, You can make several draws from your account up to the credit limit set by your lender.
Many small businesses (particularly startups) often find it difficult to access traditional loans and financing from banks. This is where invoice factoring comes in—it’s an effective way of sourcing capital without having to give up equity in your business. Simply put, invoice factoring means selling invoices at a discount or factoring them out for cash upfront.
Cannabis-related businesses now have more banking options through smaller community banks and credit unions. Due to greater oversight and paperwork and the fact that cannabis is in a high-risk industry, cannabis accounts charge higher fees than traditional business accounts. In addition, cannabis-friendly banks typically have policies restricting how many high-risk customers they accept.
Cannabis Business Funding
You may have noticed many options for raising funds for your cannabis business. These methods and sources of funding can be very beneficial to the growth and health of your company. Call Bespoke Financial at 323-508-1280 to talk to our cannabis loan lenders about long-term loans for business.
Santa Monica CA 90401