Securing financing for starting any type of cannabis related business comes with a unique set of challenges. Since cannabis is not yet federally legal, many commercial lenders are reluctant to underwrite cannabis loans. Even in legal states there are strict regulations surrounding these types of loans. Having experienced brokers on your team will give you peace of mind as you begin your new business.
If you would like to discuss cannabis loan options with a qualified broker, the team at POM (Peace of Mind) Capital & Funding Services know the laws and regulations to help you smoothly secure funding for your business endeavor.
How To Apply
When applying for a cannabis loan, private lenders are your best option to secure financing. However, private lenders in legal states have strict requirements they must adhere to for approval and funding varies depending on where you plan to open your business. Before you apply for a loan, review all the state guidelines to ensure your chosen state is the ideal location to start a cannabis business. Some states are fully legalized while others only allow medicinal use. You will need to undergo a background check along with the proper licenses and certifications.
From there, getting approved for a cannabis loan follows the basic procedures for other types of business loans. You will need to come prepared with a thorough business plan detailing the scope of your business plan. This plan needs to include:
- Business operations
- Market Analysis
- Legal environment
- Financial projections
In addition to this information, lenders will also look at your personal finances. This includes your credit history, other investments, and all debts. A high credit score is imperative for convincing potential lenders to invest in your business. As with any loan, convincing your investors you have a solid business plan with a lucrative outlook and your proposal is low risk to them is key to getting approved.
Obstacles Securing Funding
Getting approved for a loan can be difficult as most traditional lenders are unable or hesitant to provide financing when cannabis is currently not federally legal. Typical commercial lenders will not underwrite cannabis loans as the FDIC will not insure these agreements. Approval for business credit cards also can be near impossible to get as they are backed by major banks who are not willing to take on the additional legal risks.
We Can Help
At the POM Capital & Funding Services, we can schedule a consultation to learn more about your options and what to expect when acquiring a cannabis loan. Coming prepared with the right financial documents and project expectations will help your broker become familiar with your circumstances to get you the best loan possible.
If you would like to discuss your cannabis loan options with an experienced broker, call POM Capital & Funding Services at (631) 354-9290 or write to us at [email protected] to set up a free consultation today.
POM Capital & Funding Services is a leading provider of alternative funding solutions for businesses of all types and sizes, offering commercial finance solutions and products to businesses in the Centerport, New York area and throughout the state of New York.