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What Documents Do I Need For Cannabis Working Capital?

What Documents Do I Need For Cannabis Working Capital?

Taking out a business loan requires a fair amount of paperwork: documents that indicate your business cannabis working capital expenses and profits, documents that indicate your professional licensure and insurance, and documents that demonstrate what a credit provider can expect to see a return on their investment in your operations.  Preparing these documents ahead of time will give you a major advantage when it's time to ask for a cannabis working capital loan, allowing you to point out your operational strengths while addressing any weaknesses.  What documents are needed for a loan?

  • Bank Statements
  • Tax Returns
  • Proof of Business Registration
  • Licenses
  • Financial Statements

Bank Statements

Even a mom and pop cannabis dispensary with a handful of employees needs to demonstrate its cash flow.  This means bank statements that date back three to six months at minimum.  A loan provider will need to see that the cannabis business name appears on the bank statements (rather than having these statements linked to a personal account), that the bank statements match your bookkeeping with few discrepancies, and that you are consistently putting money into a bank even if you are taking money out as well.  Be prepared to explain any issues such as periods without a statement, overdrafts, or reasons why a bank statement may not match internal records of spending and saving.

Tax Returns

If your cannabis business has been in operation for more than one year, you should be able to provide the tax returns sent to Uncle Sam. If your business is a sole proprietorship or a partner operation, you may be able to provide personal tax returns, called pass-through entities.  Otherwise, if your business is an LLC or a corporation, you'll need the business tax returns.  These tax returns indicate profits and losses, meaning that they are used by creditors to determine the interest rate for a loan.

Proof of Business Registration

Every business in the United States must deal with registration in their city, county, and/or state.  That goes double for cannabis businesses due to the complex laws and processes they operate under.  Proof of business registration doesn't just indicate that you've filled out the requisite paperwork, but that you understand the obligations for your operations and have followed through with the necessary steps.  Depending on the size, scale, and organization of your business, you may need a DBA registration, a partnership agreement, or an LLC operating agreement.  

cannabis financing Licenses

A simple business selling something like arts and crafts doesn't need a license for its operations.  A cannabis business, by contrast, requires licensure before it can even think of opening its doors to the public.  An operating license for a cannabis business is absolutely essential, just as no bar could ever operate without a liquor license.  Make sure you can show a copy of this license to a lending provider so that there's no question about the legality of your business.

Financial Statements

Why do you need a cannabis working capital loan in the first place?  Perhaps you need cash for expansion, or perhaps you need security for unexpected expenses.  Whatever your motivation, make sure you provide profit and loss statements, cash flow statements, and balance sheets to a loan provider to make the picture of your financial health crystal-clear.  This data can make it clear why you need a loan and where the money will go.

If your cannabis business needs a working capital loan, contact Canna Business Financing to see what options are available for you. We can help you sort through and manage your paperwork so that you can get the working capital you require to keep your business running smoothly.


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Posted by Canna Business Team



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