With several states legalizing marijuana, the cannabis industry is booming in the U.S. The cannabis market was valued at $10.8 billion in 2021, and industry insiders are optimistic that the market will generate a whopping $40 billion in revenue by 2030, registering a compound annual growth rate of 14.9%. With the industry thriving and growing rapidly, it offers a gold mine of opportunities for budding entrepreneurs.
That said, launching a successful cannabis business is immensely challenging. Entrepreneurs must navigate a labyrinth of legal regulations and secure the proper licenses and permits before commencing operations. With weed still being illegal federally, businesses must tackle red tape to secure funding. As marijuana is classified as a Schedule I controlled substance at the federal level, despite state-level relaxations, banks and other financial institutions do not grant loans to cannabis business owners as easily as they do for other small businesses.
This is where a canna loan comes into the picture. This article will provide all you need to know about securing a hassle-free loan for your cannabis business.
What Is a Canna Loan?
Since the cannabis industry has not yet been federally legalized, finding reliable funding for cannabis startups is like searching for the proverbial needle in a weed farm. A canna loan is funding offered by private lenders specializing in marijuana, CBD, hemp, kratom, and other related industries. There are several types of cannabis loans, including:
- Line of credit
- Inventory financing
- Purchase money financing
- Invoice financing
- Dispensary financing
The interest rate, loan terms, repayment structure, lender fees, and other factors will vary depending on the type of loan product, fund usage, and lender.
Step-by-Step Guide on How to Get a Cannabis Business Loan
1. Improve your credit score and prepare the required documents
Before applying for a cannabis loan, look for ways to improve your personal and business credit scores. Like with every other loan, even a minor improvement to your credit score can drastically increase your chances of securing approval. Pay off your credit card balances, late penalties, and other loans to increase your credit rating and improve your chances of securing approval.
Having all the documents ready makes it easy to secure the loan. While the actual list of documents required will vary depending on the lender, here are the standard documents you’ll need when you apply for a cannabis loan:
- Financials: balance sheets and profit-and-loss statements
- Tax returns
- Business bank statements for the last six years
- Personal financial statements for all owners
- List of business equipment and assets
- Corporate structure, capitalization table, and operating agreement
- Real estate debt schedule
- Executive summary
- Appraisals or third-party reports, if any
2. Determine the right funding type
Before applying for a canna loan, make sure to research the different financing options available for cannabis businesses and choose the one that best fits your needs. We suggest getting on a quick call with our financing experts to discuss your business model and financing requirements to find the right solution.
For example, purchase money financing is better for setting up a marijuana greenhouse, whereas dispensary financing is explicitly tailored for marijuana dispensaries. Similarly, startups have varying requirements compared to already-established businesses. So do your homework to understand the different types of cannabis loans and choose the type that best suits your business’s needs.
3. Apply and receive funding
Once you have decided on the loan product, you can apply for it at your preferred lender. Bespoke Financial makes it easy for business owners to apply for a canna loan. Just fill out the application form on our site to initiate the process, and our team will contact you to discuss your business’s finances.
We might request that you submit additional documents if required at this stage. Once the application is approved, we issue the loan agreement stating the amount, fees, rate, and other details. Once you agree to the terms, we begin the disbursement, and you can receive the funding as quickly as within a week.
Secure the Best Cannabis Funding With Bespoke
Need hassle-free funding for your cannabis business? Bespoke Financial provides canna businesses with legitimate financing opportunities in this rapidly growing industry. We offer a wide variety of canna loans to suit different business requirements. Whether you’re a cultivator, retailer, or distributor, you can count on Bespoke to equip you with the right funds to help your business succeed. Fill out our online cannabis loan application form, and we’ll reach out quickly to discuss the right funding solutions for you.