A business loan is a major commitment for you and the lender. They need to trust that your business will succeed enough to profit and allow you to pay them back, and you need to be confident you can keep making payments. Naturally, you want the highest loan amount with the best rates, and luckily your chances of getting that are linked to your chances of getting approved.
Lenders want to provide money to people who are low risk and have a high degree of profitability. It's not enough to demonstrate that you're working in a highly profitable business like cannabis; you have to show them why you're going to succeed.
Let's look at 5 tips to securing your cannabusiness seed money.
This goes with literally any loan—even a modest jump of 20 credit rating points can dramatically increase your chance of approval. If you have loans or credit cards out there with balances or late fees, start by cleaning them up. You can call your creditors and ask that they remove late fees as well, which lowers your balance and can help improve your score.
If you have a particularly stubborn debt, call and ask if you can settle. Many companies have programs for people who are struggling with monthly payments to get them back on track, or to clear up significant debt more quickly.
Be wary of working with credit cleaners—they're often far more expensive than the value they provide and the process can take longer than is useful.
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You can never be too prepared to request a loan. Bring financial statements for you and everyone else on the loan, for the last 2 years. This includes checking, savings, and mortgages. You'll also need proof of concept for your business, how you expect to make money, and anything else that might matter to someone lending you a significant amount of money.
For instance, if you need cash to buy a storefront, have one picked out and get some comparables. Find your supply lines, have a marketing plan, and list your expected costs. These extra steps will show the lender that you've considered this and spent a lot of time planning. If they're on the edge about lending to you, this can push them onto your side.
If you're buying a storefront or any property related to your business, save up as much as possible. This will show you have the money to invest, and it proves you're responsible enough to get that much cash towards your business.
You can do this by asking for equity financing, where investors give you cash in return for shares of the business. You can try crowdfunding or borrow from friends and family, but having that initial down payment in hand is a huge deal.
Especially if you're a younger businessperson, having someone with established credit co-sign can help improve your chances of successfully getting a loan.
Even in states where medical dispensaries are legal, it can be hard to find a bank that wants to work with cannabis companies. This is because cannabis is still illegal on the federal level and that can put certain pressures on banks.
A lender who specializes in the cannabis industry understands the policies and needs of running a dispensary or other cannabis-related business. They're also more likely to approve your startup for a loan as they won't have the preconceived bias against cannabusiness that many other banks will.
The good news is our team can get you pre-approved in a short amount of time. Finding the right loan, at the best rate from the right lender can be the perfect platform on which to build your cannabis business.
Posted by Canna Business TeamFacebook
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