Getting a Cannabis/Marijuana Business Loan
4 Tips for Getting a Cannabis Business Loan
Still, the recreational and medical marijuana markets are booming while state governments submit to mass public pressure to legalize. This makes the cannabis lending market increasingly damp and creates tough competition for anyone trying to get cannabis business loans.
More and more motivated entrepreneurs are trying to position themselves in the various budding marijuana markets to expedite and maximize the profits they can achieve. The following tips can help you stand out as a professional and obtain the financing your marijuana-based business needs to grow. Obtaining cannabis business loans IS attainable.
Tip #1: If you apply for a cannabis business loans, then you need to be prepared with a professional business presentation. You can’t just wing it because you think the idea is cool and you want in! Prepare an expert-level business plan with a feasible exit strategy that maximizes profit projections. Make the lender sure that you are a safe bet and that your payments will be made on time without issues.
Tip #2: Arm yourself with the answers to important questions that the cannabis funding source may want to know! Consider:
- What is my credit score?
- Are you dealing with a collateral lender or an equity investor?
- Do you a verifiable history of investments or paying off loans?
- How much money do need to borrow and what is your expected rate of return on the investment you will make?
You’ll also need to ask the cannabis business loans lender questions. For instance, how much of a role will the lender have in your day-to-day operations? What is the interest rate you will pay? What type of reports will you need to provide, and how often?
Tip #3: Be able to back up your claims about how great your product or service is or will be. For instance, if you claim to make the most delicious pot brownies or the most effective CBD extract supplement, then have samples ready to show off! Frankly, cannabis lenders have limited time and get tired of unsubstantiated claims of product superiority. Without proof, you’ll be far less likely to obtain a cannabis business loan from any funding source.
Tip #4: Have an excellent credit score and history. The industry is still considered a high-risk realm, especially until the United States ends its prohibition of marijuana. When marijuana prohibition ends, there will undoubtedly be a substantial reshaping of the lending practices used by large banks like Wells Fargo and Chase. However, currently, your credit rating matters, a lot when attempting to obtain a cannabis business loan. You’re going to need a credit score of at least 700 to satisfy most companies that finance marijuana businesses.
If you have a fresh idea for a unique weed business, then contact Cannabis Startup Loans today (apply here) to discuss how we can get you the startup cannabis business loan you need to launch and grow. Our professional team has helped many new and existing marijuana businesses to become very successful.