Cannabis Industry Startup Business Loans
As cannabis becomes legalized nationwide, many businesses are eager to invest in this lucrative industry. With significant consumer interest in medical and recreational cannabis, companies are in an excellent position to grow in the coming years. However, it can be challenging for a startup business in the cannabis industry to get adequate financing.
Due to the substance’s federal history, traditional banks are reluctant to lend to cannabis startups. Fortunately, independent lenders like BitX Funding have several loan options for cannabis industry businesses. With suitable startup business loans, cannabis small businesses will have the funds they need to flourish in 2022. This article will cover cannabis startup business loan options that small business owners can take advantage of in the future.
The U.S. Cannabis Industry in 2022
With the legalization of cannabis sweeping the nation, individuals are seeking businesses to offer this highly desirable product. While the pandemic slowed down other industries, cannabis sales soared. In fact, since the pandemic, over half the U.S. population has increased their consumption of cannabis. Further, as we come out of the pandemic and back into normalcy, cannabis sales are projected to grow. 2021 saw a 40% increase in cannabis sales with a projected 55% increase in 2022.
All this goes to say that cannabis is a highly lucrative business opportunity for small business owners. The demand is available; all that’s required is a supply to meet consumer interest. However, getting into the cannabis industry means establishing a startup. While traditional banking institutions are hesitant to lend to startups, they are even more reluctant to associate with any cannabis industry business.
Fortunately, you can get the startup business loans you need with an appropriate online lender. All you need to know is your options, the qualifications for those options, and how to get started.
Startup Business Loans for Cannabis Industry Companies
While getting funding from traditional banks for startup business loans is difficult, it’s not impossible. In fact, with the right lender and knowledge about your options, you can get qualified for funding within days. All it takes is knowing your loan options and the qualifications for those options. For example, while it can be tedious to apply for a term loan as a startup business, you can leverage your credit to get a personal term loan that you apply to your business.
The following are cannabis startup loan options that you can apply to your business. While they focus on different aspects of cannabis financing, they can all be used for successful growth operations or dispensaries.
Personal Term Loans for Startup Businesses
- 12-15% APR
- Up to 300k in funds
- 0> years in business
- 700+ Credit Score
In many cases, it can be challenging to find funding for your business without a business history and credit score. However, it’s possible to use your personal credit for smaller loans. One of the best ways to leverage personal credit for your startup business is with a personal term loan. While not as large as most business loans, personal term loans can offer considerable startup liquidity.
These loans offer a premium on flexibility because you can put the funds towards any business expense. Because they are typically unsecured, you don’t need to put up collateral. Further, you don’t need to have the minimum two years in business commercial loans required and can use the funds almost instantly. While these loans are attractive, they are not commercial loans, and lenders will look closely at your personal credit history. You’ll need a minimum 700 credit score to meet approval, and the APR is on the higher end of loans.
0% Interest Business Credit Cards
- 6-20% APR
- $5k-250k Line of Credit (~10% of Annual Revenue)
- 1+ Year in Business
- 600+ Credit Score
For businesses with many extraneous costs, such as cannabis industry startups, stacking business credit cards is a viable way to supplement income to the company. With 0% business credit cards, you open one or more lines of credit for your business. You can then use those funds to cover overhead costs, purchase equipment, make payroll, or pay bills.
If your business has good credit, you can open multiple lines of credit at 0% interest. This strategy is known as credit card stacking and allows you to bypass restrictions on the loan amount to access the funds you need now for your business. Just ensure that you don’t open more accounts than you need and can pay back the money that you borrow.
Credit card stacking is an excellent solution for small businesses with uneven cash flow. Rather than wait to be approved for a term loan and hope for the best, business owners can use smaller funds to grow their business now. Further, funds are available almost immediately by lenders and can be allocated towards virtually any business expense.
- 8-30% APR
- Up to 100% Equipment Value
- 1+ Year in Business
- 630+ Credit Score
Many startups require significant equipment to get their operations up and running. For example, if you plan on starting a large grow operation for cannabis, you’ll need to invest in a lot of equipment before selling your product to the public. However, getting that equipment up front and having enough funds to run the rest of your business can be costly. That’s where equipment financing becomes a premium option.
With equipment financing, you take a collateralized loan out against the equipment you’re purchasing. As your business progresses, you make fixed rate payments on the equipment, financing it til it’s paid off. Once you pay off the equipment plus interest, it’s yours to own. However, if you cannot make payments on the equipment, it becomes repossessed by the lender.
This loan option is excellent for businesses with many equipment purchases up front that rely on ongoing sales, such as those in the cannabis industry. While the interest rates are higher than other startup business loans, this option remains one of the best ways to finance your startup while getting a product ready for sale.
Get Startup Business Loans for Your Cannabis Industry Company, Today
The cannabis industry is rising and in an excellent position to grow in the coming years. With more states legalizing medical and recreational cannabis, there’s a largely untapped market for product sales in the cannabis industry. The only thing preventing companies from this opportunity is the lack of suitable startup business loans.
While traditional banks are hesitant to loan to startups and outright reluctant to assist anyone in the cannabis industry, BitX Funding has you covered. We’re your dedicated online loan lender for any business need and have a full suite of loan options available depending on your credit and business history. If you’re interested in startup business loan options for your cannabis business, contact BitX Funding today.