Whether you’re starting a brand-new cannabis business or you’re running one currently, having sufficient capital to operate is a must. The problem, however, is that securing funding isn’t the easiest for those in the cannabis industry.
It’s not as though you can walk into a conventional bank and request a business loan. Fortunately, you do have options. If you’re wondering how to get funding for a cannabis business, here are a few methods to consider.
Bootstrapping is a type of funding in which you use your own money, such as personal savings.
In essence, it’s self-funding. By relying on your own money, you don’t have to worry about taking on debt or trying to apply for any form of financing. It can be challenging to go this route, but it is possible if you have enough to get you started.
2. Friends and Family
You might also consider asking friends and family for some startup cash or money to help you grow your existing business. While less complicated than having to apply for financing, there’s a stigma surrounding lending to friends and family members.
If you go this route, consider drafting up a repayment agreement and having both parties sign it.
A partnership could be a great way to get cannabis funding. The right partner will bring more than investment funding. They can also supplement your current skill set with their own — which can help your business thrive and succeed.
4. Lines of Credit
While conventional banks might not be willing to work with cannabis businesses, other financing companies specialize in it. One common option for cannabis business loans is a line of credit.
Instead of a lump-sum loan, you get access to a pool of funds. It offers a more flexible way to meet your needs without having to apply for a loan every time you need money.
5. Invoice Financing
Invoice financing allows you to leverage your unpaid invoices and transform them into immediate working capital. A company buys those invoices and provides you with a set percentage of the total value. After your customers pay, you get the remaining amount minus fees. Without having to wait for your customers to pay, you can take advantage of unique opportunities and ensure you’re able to meet the needs of your business.
6. Inventory Financing
Instead of invoice financing, you might consider inventory financing. With this option, the financing company pays the cost of your products for you. You then get a longer repayment term than what you might have had from your vendor. That gives you time to sell your products and get the funds you need to pay the cost.
Get the Cannabis Funding You Need for Your Business
Now you know how to get funding for a cannabis business. It might not be as easy as getting financing for other types of businesses, but it is possible. Whether you opt for cannabis business loans, asking friends and family, or choose another option, having the money you need to start and run your business can help you achieve your goals and succeed.
Are you considering cannabis business loans, lines of credit, or invoice financing? Bespoke Financial can help you get the funding you need to start or continue running your business successfully. Schedule your consultation and find the right solution for you today!