Financing Options for New & Existing Cannabis Businesses

Top 5 tips for financing & the most commonly leased items.

Banking and financing have been daunting tasks for many cannabis businesses in the past. Today, there are more options for businesses looking for start-up capital for launching new ventures. We are also seeing more options for equipment leasing, real estate loans and working capital for growing existing businesses in the cannabis space.

Access to banking services for cannabis businesses has improved recently as more choices have become available in the marketplace. A leader this arena, Partner Colorado Credit Union in Denver started by Sundie Seefried, has launched a new company, Safe Harbor Services LLC, focused specifically on helping more financial institutions provide bank accounts to cannabis related businesses (CRB’s) — expanding banking and financial services to new states across the country.

While the market for financing CRB’s grows, there continues to be more demand for capital than available suppliers. For new and existing businesses seeking financing, it is important to be as prepared as possible as you search for the right financing options. I have listened to hundreds of requests for capital from cannabis-based businesses and completed $30 million in loans and leases for CRB’s in the past three years. Here are the top five must-haves I recommend when seeking financing.

  1. Good credit
  2. Good financials (especially for established businesses)
  3. Timely response for document requests
  4. Reasonable expectations as to rate and terms in a federally illegal business with no history
  5. Personal guarantee

For established cannabis businesses, there are several items that often require financing for day-to-day operations or expansion of facilities or stores. The following are the most commonly leased items.

  1. Lighting for greenhouses or indoor grows
  2. Ballasts and other lighting components for grows
  3. Extraction machines
  4. Greenhouses
  5. Scientific and testing equipment

Working with business owners in the cannabis space every day, our goal is to match them with investors and/or financing partners to acquire the financing they need to expand or start their businesses and we often see the following types of loans:

  • Equipment – All types
  • Real estate – Land, construction, purchase and refinance
  • Working capital – For general corp. purposes, including build-out
  • Start-up funding – With good credit up to $250,000
  • Lines of credit – With good credit up to $250,000
  • Inventory loans – For equipment or product sales Non-THC

Whether you are seeking working capital, real estate or equipment financing for an existing business or funding for a new venture, being well-prepared to talk to lenders or potential financing partners is critical to a successful outcome. Do your homework, understand their objectives, prepare your financials and be equipped to personally guarantee your loan. Following these tactics will keep you ahead of the competition and increase your chances of success.

TELL US, have you struggled with financing your cannabis business?

Scott Jordan is Director of Business Development for Dynamic Alternative Finance. He has arranged $30 million in loans and equipment leases for cannabis business owners in the past three years and is a commercial finance expert known throughout the marijuana industry. Scott has been interviewed by national media outlets, authored articles and been a featured speaker at industry conferences on debt-based financing options.

Leave a Reply

Your email address will not be published. Required fields are marked *