Cannabis Business Loans
If you run a cannabis business, you probably already know how difficult it is to navigate legal regulations, especially with regard to licenses and permits, purchasing real estate, and of course, finding funding.
Cannabis Business Loans
In 2018 the United States Congress passed the Farm Bill that legalized the cultivation of cannabis on American soil. On top of that, many state governments are legalizing the sale of cannabis goods whether for recreational and medicinal use. These two changes in legislation have opened the door for an entirely new industry and new business opportunities.
However, due to the unique regulatory and banking environment that surrounds the newly-established cannabis industry, many business owners face unique needs when it comes to financing. At L3 Funding, we provide cannabis business loans to directly support these businesses’ specific needs and, ultimately, their success.
We offer equipment financing options to help your business expand. Feel confident knowing you may obtain the capital investments necessary to help your business successfully grow.
You have questions, we've
got answers
What is Cannabis?
Cannabis is a plant or crop with distinct psychoactive and therapeutic properties. It is often referred to as marijuana, pot, or weed. Scientifically it is identified as Cannabis sativa, Cannabis indica, and Cannabis ruderalis.
Cannabis contains great amounts of tetrahydrocannabinol (THC), a natural psychoactive chemical compound. THC is slightly hallucinogenic. But it also creates a sense of euphoria and relaxation greatly enjoyed by recreational users.
The other active ingredient in cannabis is Cannabidiol (CBD). Unlike THC, CBD is non-toxic and non-euphoric. This chemical has high claims of therapeutic and wellness properties. Both THC and CBD are lauded for their mild effects, as compared with harder street drugs and alcohol.
Most cannabis products contain a mixture of THC or CBD. Psychoactive effects are less pronounced in CBD products as opposed to THC products. Although, no matter the chemical composition, cannabis is the base for many other products and businesses. Whether for recreational or medicinal purposes, business owners are capitalizing on this crop, experiencing great expansion and success.
How to Apply for Cannabis Business Loans
There are many benefits of a working capital loan, including:
To apply for a cannabis business loan, you will need to provide the same documentation needed for a traditional business loan, in addition to:
A Business Plan and Project Plan: You will need to present a professional, polished business plan to your desired lenders. It should thoroughly detail the scope of your business. Address your business’s operations, market analysis, legal environment, and any additional information that will convince lenders to invest.
Fully Disclosed Financials: All cannabis business owners must disclose financial projections. For startups, share personal financial information, such as past credit history, investments, and debts, of all those involved in your venture. Ideally, they should each have a FICO score of at least 700.
State Licenses and Background Checks: Before applying for funding, review state guidelines. Proactively seek state licenses and certifications. Also, present your lender with a recent background check from the state you plan on operating your business. This creates confidence and reduces perceived risk.
Common Types of Cannabis Business Loans
Commercial banks are reluctant to underwrite cannabis-related financing. Since selling cannabis is federally illegal, loans can not be insured by the FDIC. While cannabis financing is more difficult than most traditional commercial lending, there are still funding options available to entrepreneurs.
There are a few private companies that underwrite marijuana business startup loans. But, these lenders have strict requirements due to heightened legal risks. Plus, cannabis business funding varies state by state. Some states have legalized the sale of cannabis. Others only permit the drug for medical purposes. Because of this, each state has its own guidelines and requirements for commercialization. Therefore, seek funding in the state where your business operates to not only gain capital but to also abide by the law.
What typically remains standard are the qualifications for a business loan. Borrowers must have impeccable credit records and a well-crafted business presentation to begin conversations with these lender firms. Marijuana equipment financing is a common type of business loan. It follows the same practices as more conventional business equipment financing. Capital gained from these loans should specifically be used to finance the machinery and equipment involved in the business’s operations.
Cannabis equipment leasing is a viable financing option as well. This follows similar rent-to-buy terms and agreements you will find in other industries except, here you will lease cannabis equipment, not vehicles or homes.
Cannabis Business Funding Obstacles
For legal reasons, commercial bankers and the SBA do not underwrite “weed loans.” Business credit cards that are backed by these major banks are difficult to obtain as well.
Therefore, smaller, private lenders are available alternatives. However, stricter qualifications may be put in place to offset loan risk. This includes securing the loan with collateral or mandating a cosigner. They may also require borrowers to undergo licensing and background checks prior to loan approval or funding.
Seeking funding for your cannabis business may seem difficult, but, it is not impossible. By overcoming these obstacles, your business is more than likely to receive financial backing that may lead to future success.
We are here to help, but don’t
just take our word for it.
"Our distributors were charging us premiums because we didn't have the money to pay for our inventory in advance. L3 arranged a merchant cash advance within days and we were able to capitalize on huge discounts available to much larger businesses. We've never looked back since and consider L3 a long tern partner."
Chad, Spokane, WA
$155,000
Total Funding Deposited
4 hours
Time to funding
"Our oven stopped working right before our busy tourist season and our bank denied our loan request. L3 Funding was able to get us the cash we needed in a couple of days and we were back in business in time to handle the rush of customers. L3 has been an awesome partner and they really provide peace of mind."
Alex, Myrtle Beach, SC
$75,000
Total Funding Deposited
24 hours
Time to funding
"We were rapidly scaling but our customers would take too long to pay our invoices. We had to choose between growth or stability. Our bank wouldn't even consider our special circumstances and denied our credit line outright. The financing with L3 Funding opened up our cash flow and helped us expand a lot faster than we ever could alone."
Justin, Austin, TX
$48,000
Total Funding Deposited
48 hours
Time to funding
L3 Funding and Cannabis Business Loans
The cannabis sector has created great opportunities for entrepreneurs. However, these opportunities can come with funding limitations. Overcome each hurdle with the assistance of L3 Funding. We specialize in successfully matching loans to businesses of all shapes and sizes, including those within the cannabis industry.
For any questions regarding funding guidelines, loan options, or getting cannabis project financing, please apply online today!
Talk To Our Funding Specialists
Get funding options quickly with no obligation and an easy application process.
Let us get to work for you.