When you are running a cannabis business, you’ll probably need to secure some financing at one point or another. If you’re like many owners, these challenges tend to be the same ones you face when trying to obtain financing for any other type of business. The difference is that your cannabis company is likely to experience more of them than other types of companies. Luckily, there are solutions to these difficulties. Let’s dive into some of the most common challenges faced by cannabis entrepreneurs trying to get financing for their businesses and what can be done about them.
Challenge #1: Use of personal assets for collateral by cannabis business owners
Cannabis business owners face many problems when trying to get financing for their businesses, but one of the biggest ones is finding a bank that will approve a loan to a cannabis company. Many banks find it too risky to loan money to cannabis companies because of the current federal prohibition on marijuana. Many cannabis entrepreneurs are forced to put their personal assets on the line and use them as collateral for a loan. For example, if you have your home or car, a bank may be willing to loan you some of the money you need to get started. The downside of using a personal asset as collateral is that it exposes you to the possibility of losing something important if your cannabis company fails. Alternative Funding Group can help you, they have several financing options that will be tailored to your needs.
Challenge #2: Lack of traditional credit history
If you are trying to get a loan for your business, one of the first steps is for the bank to look at your credit history and some of the things in your credit report will include your payment history and when you have been late on payments in the past. If you are a cannabis business owner, your credit history will be limited or will not exist at all because you cannot have a business account in the traditional banking system. This is because cannabis is illegal to grow, distribute, sell or use in most states, and because the federal government still considers cannabis a Schedule I substance. This makes it impossible to have a traditional bank account and makes it so that you cannot establish a credit history. Alternative Funding Group does not have these same restrictions, they will look at your business plans and how you plan to grow your business. They will help you get the financing you need.
Challenge #2: Lack of sensible underwriting standards
Even when you find a cannabis business bank that is willing to offer a loan to you and your company, you may run into problems when you try to get a loan. Banks tend to have underwriting standards that are used to determine whether you are eligible for a loan, and these standards can vary from bank to bank. Depending on the bank, underwriting standards may be more or less stringent.
Some banks may even make you ineligible for a loan. If you are dealing with a bank that doesn’t have a good history of working with cannabis companies, you’re going to have a hard time getting a loan approved. One of the things that can help you get a loan is to have a company like Alternative Funding Group that will help you get the loan you need to get your business up and running.
Challenge #3: The wrong type of business loan
One of the biggest challenges you are likely to encounter when trying to get a loan is finding a loan that is the right fit for your cannabis business. There are a variety of different loans available including SBA loans, merchant cash advances, working capital and more. Each has their distinct advantages and disadvantages. If you are a cannabis entrepreneur, you are going to want to make sure that you get a loan that fits your needs and can help you succeed. Not all of these loans are going to be the right fit for your cannabis business. In, Alternative Funding Group, we offer several types of loans tailored to your business.
Challenge #4: Unwillingness from banks to take cannabis business as a client
When you’re a cannabis business owner, you want to get financing from a bank. Unfortunately, many banks are unwilling to take on a cannabis business as a client. This is a result of the federal prohibition on marijuana and the fact that it is illegal to grow, distribute, sell or use marijuana in the United States. In addition to the federal ban, many states have also legalized and decriminalized marijuana, but banks still find it too risky to do business with a cannabis company. If a bank finds out that you have a cannabis company, they can cut off your access to business accounts and your ability to get a loan.
Conclusion
Cannabis business owners are faced with many challenges when trying to secure a loan to grow their business. From obtaining business accounts and securing financing, to knowing where to get a loan and how to get one, there are many things that must be considered before you can get funding for your business. Luckily, there are solutions to these problems. If you need to get financing, Alternative Funding Group can help you. With their help, you can get the funding you need for your business.
Let Alternative Funding Group help You!
At Alternative Funding Group, we understand the issues you are going through as a cannabis entrepreneur looking for financing for your business. We have helped cannabis companies get the financing that they need. We have the knowledge and the understanding to help you.
We offer services that help make it easier for customers to get the financing they need. We give you choices, options and alternatives, and we will find the right loan for you. Alternative Funding Group gives you a place to turn to when your business needs some funding.
Almost all business owners know that Merchant Cash Advances are the best type of financing options out there. They have helped countless businesses with cash flow issues, growing pains and even getting started. You probably already know about how risky it is to use credit cards for financing your business needs and how much interest you end up paying. But did you know there are even better alternatives that can offer you lots of benefits? We’ll compare a Merchant Cash Advance and a business loan and lay out the differences between them.
Merchant Cash Advance vs Business Loan: Definition
What is a Merchant Cash Advance (MCA)?
Merchant Cash Advance is the fastest way to get your cash. Banks and credit unions require you to wait up to two weeks while they process your loan. If you get a merchant cash advance, you can have your money within a business day. An MCA is literally the fastest way to get cash to your bank account.
A Merchant Cash Advance business funding solution from Alternative Funding Group provides cash advances to all types of businesses. Alt Funding knows that these businesses will repay on time with their future credit and debit card sales. We can approve an application the same day and you can get your cash advance within 24 hours.. You don’t have to wait for weeks to get your money.
What is a Business Loan?
Business loans are great for longer term financing needs. They are usually from a bank or credit
union and you won’t get the money for months. A business loan can take up to 12-18 months to process depending on how long it takes for you to meet the requirements and get approved. You can get approved much faster if you have a credit card or a personal loan to use as collateral. But the rates for collateral loans are much higher.
A business loan can be a good option if you need money to pay bills or to grow your business in the long term. A Merchant Cash Advance is paid back using future sales. A business loan is repaid from your future business earnings.
Merchant Cash Advance vs Business Loan: Pros
The biggest advantage of a Merchant Cash Advance is the fast money. You don’t have to wait for weeks. You can typically have your cash within 24 hours afterthe approval. The biggest disadvantage of a Merchant Cash Advance is the repayment terms. They are usually short, up to 12-24 months. If you’re not able to meet them, you will have to pay for the interest on the full amount.
Business loans have their own advantages. You have access to a lot of different banks, even online banks. The interest is much lower and you have a lot of options to choose from. You can get a business loan with collateral at a very low interest rate. A business loan can be a great option if you need money to grow and expand in the long term. Traditional lines of credit can only be used when you’re in good standing and the business has good credit. If your business has issues with cash flow and you need money fast, a Merchant Cash Advance is a better option.
Merchant Cash Advance vs Business Loan: Cons
The biggest disadvantage of a Merchant Cash Advance is the interest. If you’re unable to pay back on time, the interest can be extremely high. You can obtain a business loan at a much lower interest rate. The interest rate for a Merchant Cash Advance is usually in the 20%-30% range.
Business loans have their own disadvantages. The interest can be much higher and you have to go through a lot of paperwork to get approved. You will have to wait for a few months to get your money. And you have to meet certain requirements to get a business loan.
Summary
All in all, Merchant Cash Advances are the best way to get fast funding for your business. You should be extremely careful with the way you spend your MCA and the interest rates. But if you have a clear plan for how to use the money, a Merchant Cash Advance can help your business grow and provide you with lots of advantages:
- More cash for your business
- More money for expansion
- More money for marketing
- More money for payroll
- More money for research and development
- More money for growth
- Apply for a Merchant Cash Advance at Alternative Funding Group
We help businesses get the fast business funding they need to grow. Alternative Funding Group’s MCA is fast and easy. We will approve you the same day and you can get your money within 24 hours. For all your business financing needs, Alternative Funding Group can help.
Business funding is what keeps new businesses running. The more working capital you have on hand, the more flexibility you have with your business development. Being prepared for funding will allow you to take advantage of opportunities when they arise, without constantly worrying about your financial needs. Additionally, this plan can help you to lessen your chances of being turned down for financing in the future, which will only benefit your business in the long run.
- Set goals for the future and determine your short term or long term business funding needs
Take a step back, look at your business and consider what you really want to achieve over the next year or so. For example, are you planning to launch a new product line, or do you want to expand into a new market? Once you’ve decided on your business goals, you can then work out how much funding you’ll need to achieve them.
- Factor in a bit of a buffer, just in case
You never know when unexpected events might happen and throw your plans off track. So it’s important to make sure that you have some wiggle room in your budget and working capital. By factoring in an extra few thousand dollars, for instance, you won’t be caught out if something goes wrong and you end up needing more funding than anticipated.
- Make sure you have the right people on board
If there’s one thing that can severely affect your access to business finance, it’s having the wrong people in charge. A strong management team with solid experience is crucial if you want to attract investors or secure business loans from traditional lenders. It’s also useful to have a good accountant who can help with financial record keeping and loan applications.
- Get business advice
Getting business advice from seasoned professionals is an excellent way to learn about the business world and learn about all the options you have for financing. A business plan consultant can help you create the most effective plan for your business, and will be able to guide you towards financing solutions that are tailored to you.
- Consider alternative sources of funding
When cash is tight, it can be tempting to ask friends and family for money. While this isn’t always a bad idea, sometimes it can cause more problems than it’s worth. For example, if you’re having trouble paying your vendors, and you ask your brother or sister for help, then you’re putting a strain on your personal relationships as well. It’s much better to avoid this situation altogether by always being proactive with your funding needs.
Summary
By following these five tips, you’ll be able to get your business off the ground, and put yourself in a strong position for the future. Once you achieve your business goals, you’ll be able to relax and know that you have a solid plan for the future.
If you’re stuck short of cash flow, you can always seek the advice of a business plan consultant. They can help you work out your most effective financing options and make sure that you’re always meeting your business funding requirements.
If you’ve already started your business and don’t have the business funds available, it doesn’t mean that you’re doomed for failure. There are lots of options available for raising money, and with the right business plan you might be able to secure funding from other sources.
Alternative Funding Group: What Are Our Solutions?
Alternative Funding Group is one of the leading providers of business financing in the country. We specialize in providing business loans and other forms of funding to businesses of all sizes, giving companies the chance to make their dreams a reality.
We specialize in working with businesses that may have been turned down elsewhere. This means that our business funding packages are suitable for companies that may have a spotty credit history or businesses that have yet to turn a profit.
If you would like more information about how you can apply for fast business funding, please don’t hesitate to contact our team at Alternative Funding Group. We are here to help and would be happy to answer any questions you may have.
Merchant cash advance is a great option when you cannot secure any other type of funding. You will find some of the fields perhaps not familiar since they are not that common. The majority of businesses using merchant cash advance tend to be in the retail industry, and are typically in hyper competitive industries such as travel, vacation and small business financing. Of the different businesses out there, which industries can benefit from a merchant cash advance most? The answer will surprise you. Let’s take a look at 6 industries that are using merchant cash advances and other financing techniques to fuel business growth.
- Retail-Retail businesses
Almost in every town and are one of the most competitive industries in the realm of business. When you get a business loan for a retail store, you will have to compete with hundreds of other businesses just for the loan. What does this mean? It means the loan rates are higher and the terms are tougher. Now multiply that by a factor of ten and that is what it’s like trying to get a merchant cash advance. A merchant cash advance can become one of the safer options for a retail business. The merchant cash advance can be used for retail business funding including inventory, marketing, pay raises for employees, working capital and more.
- Travel and Leisure industry
Vending machines and snack shops are very popular at airports, train stations, and even in office buildings. These types of businesses accept a lot of cash and don’t always have the ability to deposit their money fast enough. Many times, it is due to the fact that they have no frequent access to a bank. They need a merchant cash advance for transportation funding to help them as soon as possible so they can keep up with their business. This can be especially critical if they need money for daily operations. They can also use it to improve their operations or increase their product sales.
- Healthcare industry
Healthcare is a very competitive industry and that is why they need to use merchant cash advances. In this industry, cash flow can be a problem and using a merchant cash advance can fix that. Businesses in the healthcare industry use the merchant cash advance, medical funding or other types of financing to pay insurance claims, pay down outstanding accounts, buy supplies and more.
- Food and beverage
This industry is very capitalized on high volume, low margin. This means they make a lot of money but don’t always make much per item because of the high volume. They are a good industry to consider a merchant cash advance with because of the high volume. The merchant cash advance for restaurant funding is used for the same things you would use it for in any other industry: working capital, inventory, pay raises and more.
- Auto Repair Industry
Not only are they in high demand, but they offer a wide variety of services. This is why they need to use merchant cash advances for auto repair funding in order to help them grow their business. The merchant cash advance is used to help them purchase new tools and equipment, make repairs, do advertising, and more.
- Construction and home improvements
The construction and home improvement industry is another industry that is very competitive when it comes to financing. Banks have tightened up their lending policies with this industry and it has made it very difficult for businesses to get funding. They are not alone though, merchant cash advances for construction funding are a popular way for companies even in this field to get some additional cash.
In conclusion, merchant cash advance in the form of business cash advance is a wonderful tool that has helped hundreds of companies across America. Merchant Cash Advance can benefit businesses regardless of their size, industry or stage of development. No matter what type of business you’re in, it’s never a bad time to start thinking about your future and how you can get the funding you need to grow.
Alternative Funding Group have been funding these types of industries and many more. We have a team of deal advisors and capital providers, committed to help you obtain the right business funding. We specialize in merchant cash advance and factoring, helping you get the cash you need when banks and traditional financial institutions won’t help. Serving businesses in ALL industries, including nonprofits, and specializing in Real Estate, Construction, Retail, Health care, and Technology. Now, take a look at your own business and find out if you can benefit from a merchant cash advance. If you are looking for Merchant Cash Advance for your business, you should contact Alternative Funding Group for a free no-obligation consultation. We can help you find a merchant cash advance that meets your needs.
