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.
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.