However, because of a lot of legal red tape, the FDIC and SBA cannot and will not insure any loans for ventures that depend on marijuana to generate profits. So, without the help of major banking institutions, where can aspiring entrepreneurs turn to get the cannabis funding they need to start or expand their businesses?
Cannabis Startup Funding Optionss
Without the possibility of getting a traditional bank loan or SBA loan, those wishing to enter the marijuana, hemp, or CBD industries are faced with challenges to obtain the cannabis funding they need. Most options available are difficult to be accepted for due to requirements about revenue, profitability, and time in business that many new entities cannot satisfy.
People wishing to open a marijuana dispensary probably have no previous experience in the realm and are therefore considered high-risk applicants. Likewise, a CBD edibles manufacturer probably lacks the assets necessary to serve as collateral for a loan to construct and begin operations in a new facility.
So, there are limited options for cannabis funding, especially until marijuana prohibition is ended. Then, the financial landscape may well change favorably for those wishing to enter this lucrative marketplace.
In spite of the increasing number of cannabis funding sources that serve the weed industry, it remains difficult to obtain the seed capital required for ventures in the realm. Many people take out second mortgages on their homes, max out their credit cards, or turn to family and friends to get the credit they need to begin developing their business ideas.
If you manage to obtain seed capital, then you’re going to need to use it effectively to establish reference cases, build your business, and gain initial market traction. If you do this well, then other cannabis funding sources may open up to you. However, as with most other business types, cannabis businesses often fail before surpassing the startup phase.
If you make it to the Series A round of cannabis funding, then you are going to need to scale up your staff, product or service lines, marketing, distribution efforts, and ultimately, sales. If you’re not showing promising projections at the end of the seed phase of financing, then you’re not likely to move forward in this booming yet fiercely competitive industry.
The professional cannabis funding experts at Cannabis Startup Loans
have extensive experience at getting new and seasoned marijuana business owners the financing they need to launch or grow their operations. Contact us today by filling out this short form
to talk about how we can help you get the capital you need.References Green Entrepreneur - Where to Find Funding for a Cannabis Business