Even as the cannabis industry continues to grow by leaps and bounds, with projections to reach $30 billion in sales by 2025, the competitive nature of the industry requires an edge. To achieve that edge or competitive advantage in the marketplace, a cannabis-related business often needs access to a term loan. The question becomes how does a cannabis-related business qualify for the term loan?
A term loan for a cannabis-related business is a bank loan that is usually in the form of a lump sum with a clearly defined payment schedule. A term loan can require a relatively short period of time for repayment in the range of a few months or it can require a long period of 10 years. This type of cannabis business financing can be used to buy cannabis equipment, expand the business, and make other capital expenditures.
The financier may require a corporate or personal guarantee for the term loan, and they may require some form of collateral. But, the question is how to qualify for a term loan. To qualify, the cannabis-related business must meet a series of prerequisites to ensure the viability of the operation. Here are the top considerations.
Depending on the underwriting criteria, the interest rates fall in the range of between 8% and 18% APR. For the owner of a cannabis-related business like a dispensary, a term loan is a great option for launching a new dispensary, brand, or product.
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A term loan is a relatively quick-and-easy form of financing. A cannabis-related business should be aware of the following pros and cons:
After reviewing the benefits and drawbacks, a term loan offers clear advantages for a cannabis-related business. It’s a great option for a dispensary expansion, a large expenditure, or a one-off business purchase.
A term loan is a flexible funding option that delivers the level of financing within the required timeframe. To deliver the optimal funding solutions, Canna Business Financing is knowledgeable about which lenders are best for your cannabis business.
That includes specific recommendations for how term loans and other funding options support the financial requirements of cannabis-related business. With expertise and consulting from Canna Business Financing, the funding process is streamlined and effective. Contact Canna Business Financing today to consult with expert representatives.
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