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Marijuana has been legalized in 33 states and its industry is booming. In fact, it’s projected that marijuana businesses will have a 241% increase in economic impact by 2021. As more and more entrepreneurs enter the cannabis market, the need for CBD business loans is increasing.

Securing short-term or long-term funding isn’t easy for any business, but you can expect to face even more challenges when it comes to funding your marijuana business. Even though a number of states have moved forward to legalize it, marijuana is still illegal under federal law.  As a result, most lenders and banks don’t want to deal with the potential legal repercussions of working with marijuana-related businesses.

While traditional and bank loans are going to be difficult to obtain, alternative lenders have made it easier for cannabis businesses to secure funding with proof of a strong revenue stream and a high credit score. The rates and terms set forth by alternative lenders may not be as favorable as traditional loans, but the opportunity to qualify is much greater.

You should definitely note that some lenders may have certain restrictions when financing businesses in the cannabis industry. To avoid wasting time and effort, do your research and look for lenders who specifically work with cannabis dispensaries and other high-risk businesses.

Best Types of CBD Business Loans for Marijuana Businesses

To kick-start your loan application process, here are some of the best types of business loans for marijuana businesses:

1.    Alternative/Private Loans

Private, non-bank lenders are the most common financing option used for marijuana and cannabis businesses. To reiterate, it’s important to do your research and target the lenders that make the most sense for your specific business needs and goals as some may have restrictions. For example, some private lenders may not be comfortable providing financing for the planting and growing of marijuana but will lend money towards production of related products like merchandise, edibles, concentrates, vapes, etc. Make sure to define how much funding you need and where/what it will be going towards.

2.    Equipment Loan/Lease

Most often, equipment financing benefits cannabis growers who require expensive agriculture equipment to aid in planting and cultivating marijuana. Securing an equipment financing loan means you get the essential machinery you need without paying out of your own pocket.

3.    Cash Advance

A merchant cash advance is technically not a loan, but rather an advance payment against your business’ debit or credit card transactions. It is a type of short-term funding that’s perfect for bridging cash flow caps and adding extra working capital. In order to obtain a merchant cash advance, your business must have a strong bank statement revenue.

4.    Bridge Loan

If you need to purchase land or real estate to expand your marijuana business, there are lenders who are willing to finance your business expansion. In addition to buying land, you can also use bridge loans to provide working capital, pay rent, utilities, inventory costs and other business expenses.

Are you looking for potential lenders to fund your marijuana business? Look no further than SMB Compass. We offer different types of CBD business loans that are sure to cater to the needs of your business. Don’t hesitate to contact us by phone at (888) 853-8922 or email us at info@smbcompass.com.