Cannabis Business Loan

The cannabis business is an expanding market with significant growth potential. New uses for the product appear on an almost daily basis. Unfortunately, due to the nature of the business, securing a cannabis business loan for a cannabis-based business can be difficult. Traditional lenders for business loans often refuse loans based strictly on the controversial nature of the product.

Traditional lending institutions like banks, which are subject to federal banking regulations, are unable to provide cannabis business loans to the cannabis industry. Even in the gray area where banks could legally make small business loans to cannabis-based businesses, banks are risk-averse and prefer to avoid those types of loans.

Until federal regulations regarding cannabis-based products change, there is little chance that the lending environment for businesses that deal in cannabis will change. Fortunately, there are alternative business lending sources that are not tied to the same federal banking regulations and have more flexibility to work with cannabis-related businesses.

Cannabis products are experiencing unprecedented growth, fueled by changing laws and the new uses of the product in both the medical and recreational fields. The unparalleled expansion of the cannabis market has many entrepreneurs anxious to start their own cannabis-based businesses. Alternative business lending sources are making it possible for entrepreneurs to start or expand their business during this market boom by obtaining a cannabis business loan or cannabis start-up loan.

Hemp and CBD are experiencing a similar boom. The 2018 Farm Bill made CBD and hemp federally legal. Unfortunately, the bill is complex and policymakers are still struggling with whether the new Farm Bill makes it possible for banks to offer SBA loans to those who buy and sell hemp and CBD products. There is currently no consensus, making SBA loans difficult or impossible for businesses that deal in cannabis, CBD, and hemp products.

Hemp is at the center of the wellness trend associated with CBD. CBD is low in THC, making it less regulated than cannabis. Hemp acreage in the United States more than doubled in 2019, as more people are purchasing CBD products to treat a wide array of health and wellness issues. CBD is experiencing unprecedented growth on a global scale. Researchers estimate that the CBD market in the United States will surpass 24 billion dollars by the year 2023. For those looking to enter the business, now is the time to get in on the ground floor.

Given how fast the industry is growing, many new business owners are choosing alternative business funding sources over waiting for banks and other traditional lending sources to figure out their stance on a cannabis business loan Time is especially critical for those who have new ideas about cultivating, growing, and farming the product, new consumption devices and mediums, and biotechnology. If you do not act on your idea today, someone else will tomorrow. 

Starting a Cannabis Business

Whatever type of cannabis business you plan to open, there are steps you need to take to ensure that you comply with state laws.

• Take the time to research the laws of your state, including regulations that apply specifically to the product you plan to sell. You will also need information about the taxation of the profits you make.
• Verify that you are eligible to open the business you are planning. Some states require specific background checks, so become familiar with the rules and regulations and make sure nothing in your background will derail your business plan.
• Pay attention to the rules and regulations regarding your retail space. In some instances, you will need to avoid areas that are near schools, parks, churches, or public buildings frequented by children.
• As with any business, develop a solid business plan. The business plan will serve you well in helping to define your goals for your business, and can also help in the process of securing funding such as a cannabis business loan.

Alternative Business Funding Sources

Alternative business funding sources are often the only option for Cannabis business loans in the cannabis, hemp, and CBD industry, but that does not change the fact that alternative lending sources have advantages over more traditional lending.  Some of the benefits of alternative borrowing include:

• A faster answer about your financing needs. Banks often require large amounts of documentation, and then take weeks or even longer, to get you an answer regarding your business loan product.
• By not being tied to federal lending guidelines, alternative lending sources often have the flexibility to work with less than stellar credit. You will pay a higher interest rate in exchange for the increased risk the lender is taking, but that does not mean it is a bad idea. Many businesses in and out of the cannabis industry cannot qualify for traditional business loans. Alternative lending sources make it possible for these businesses to thrive by being able to access loan products that are tailored to their needs.
• Businesses often only need a short-term loan to bridge a gap, and alternative lending sources have access to loan products to fill that need.
• Most loan products do not require collateral, which is a relief to many small business owners who are hesitant to put up things like their home as collateral to secure a loan.

The South Florida Funding Group is one such alternative business funding source for cannabis startup loans sometimes referred to as marijuana loans. The loan products offered by South Florida Funding Group are not originated in FDIC insured banks, and so they do not have the same restrictive lending practices for businesses in the cannabis industry. 

The South Florida Funding Group makes the process of applying for a cannabis business loan simple, and often, you will have an answer within 24 hours.

• Complete the online request form. Once you submit the form, a loan specialist will contact you. You can call them at 786-544-2700 to schedule a conference regarding a loan application. The loan specialist will explain the process, answer any questions you have, and give you a realistic picture of the products you may qualify for.
• You will complete an application and provide the last three months of business account statements.
• Your loan specialist will work to determine which lender(s) suit your funding needs.
• Once the best lender(s) have been selected, your file will be submitted for their review. Additional documents may be requested at this stage in the process.
• If your request for cannabis business funding is approved, the funds will be made available to you and the terms of repayment will be explained in detail.

The South Florida Funding Group offers an array of products to suit the needs of your new or expanding cannabis business. Some of the products offered include:

• Unsecured Business Line of Credit
• Unsecured and Secured Business Loans
• Merchant Cash Advance
• Equipment Leasing and Financing
• Commercial and Investment Real Estate Loans

If you see an opportunity in the cannabis, hemp or CBD market and have confidence in your business plan, then do not let traditional lending standards stand between you and your business. Projections for the cannabis market show a prolonged upward trend, and those entering the industry now will have a distinct advantage over those who wait. If you know the time is right to open or expand your cannabis business, contact a cannabis loan specialist at South Florida Funding Group to find out what options you have for cannabis loan products to fit your needs.

At South Florida Funding Group, an alternative business funding company: WE FUND THE IMPOSSIBLE, EVEN CANNABIS!