How to Get Approved for Cannabis Business Funding

Cannabis business funding

Cannabis business funding is almost non-existent in the traditional banking industry. Traditional banks and Lenders will typically only approve a business loan or line of credit for roughly 10-20% max of the yearly gross revenue that the business made the year before.Almost every major savings and loans bank in the US.

Cannabis Credit Lines helps startup and existing business owners obtain more working capital through their proprietary lending techniques and proven experience in consulting with business owners on how to obtain Cannabis business funding

This table gives a short summary to the Underwriting Guidelines for Cannabis business funding:

Underwriting Requirements to Get Approved

Cannabis Credit Lines

Other lenders

Good Personal Credit Score (Minimum 700 and above)

YES

Yes

Funding Up to $250K *per borrower

YES

Yes

Introductory Interest of 0% for 12 Months

YES

No

Collateral (Secured)

Not required

Required

Personal and Business Tax Returns

Not required

Required

Bank Statements

Not required

Required

Balance Sheet

Not required

Required

Profit and Loss Statement

Not required

Required

Personal Financial Statement

Not required

Required

Subject to Annual Review

Not required

Required

 

Banks can issue Non-Traditional Lines of Credit just like any credit card in your pocket that the business may use to make purchases and other transactions. Non-Traditional bank lending techniques have allowed for less restrictions in place to approve a business line of credit application. A Non-Traditional Line of Credit can become approved through meeting the following criteria:

  • Personal FICO Credit Scores ranging from Okay to Excellent.
  • Utilization Percentage and Available Credit Balances. Creditors care about how much you credit you utilize and what available credit space you have on your credit report.
  • Debt to Income Ratio. Creditors care about how much your monthly bills are in relation to how much income you make monthly.

In a Non-Traditional Business Line of Credit, each bank has its own standards for approving credit limits based on the borrower’s profile and what that creditor values in considering an amount in approving an application.

Here’s how the process normally looks like for getting a Traditional Loan from a bank or lender:

 

You walk into a bank and ask for a business loan. The banker starts building your offer and begins to ask questions and information about you and your business to qualify you for one of their loans. Traditional bank loans are more restrictive in their underwriting guidelines, meaning they want to see more in-depth analysis of the borrower’s financial profile.

For Amounts less than $100,000, most banks and lenders follow these underwriting guidelines to approve a Term Loan or Line of Credit application:

 

  • The process usually takes about 3 months to underwrite Cannabis business funding
  • A sound business plan showing the opportunity, the target market, the business model, a marketing and sales strategy, the competition, a financial analysis with projections for the near and far future, background of the team of owners and staff and their experience, implantation plan with an outline for the timeline of events.

 

  • 2 years personal and business tax returns
    • They require at least 1 year showing profit

 

  • 6 months of Bank Statements to show liquidity and the power to repay the loan within the first initial time frames

 

  • A Profit and Loss Statement to measure all the expenses and revenues of the business

 

  • A Balance Sheet to measure and show all assets, liabilities, and owner’s equity or stockholder’s equity. This is very useful in determining the amount of the company’s working capital

 

  • A Personal Financial Statement to list a schedule of all the owner’s assets and liabilities

 

  • Good personal FICO Credit Scores to show the borrower’s character and credit history in repaying any debts in the past and present

 

  • A clear measurement of your Debt-to-Income Ratio. This is a useful strategy in measuring and determining how much money you have left over after you have finished paying all your obligatory bills and have leftover money available to spend for repaying a new loan that you are considering to take on to expand your business.

The same underwriting guidelines for Cannabis business funding can be applied for amounts higher than $100,000 including the requirement of having a minimum percentage amount of cash reserves to have available from borrower’s own bank account at all times.

Once all these requirements for underwriting have been met and satisfied, these banks and lenders will typically approve a credit limit equivalent to roughly 10-20% max of the yearly gross revenue that the business made the year before.

So as a Startup Cannabis Company, one quick and easy solution to get Cannabis business funding can be solved by getting funded with Cannabis Credit Lines!

You may complete an application here.