(Newswire.net — February 18, 2020) —
The newness and stigma of the legal cannabis industry makes it difficult to get financing for your cannabis business. However, there are some options for you when it comes to financing. Like any loan, before you receive it you must first qualify. To qualify for a cannabis business loan, you must submit information that will better help the lender to know you and the state of your finances. Getting into the cannabis industry is a large investment, with some higher risks than other industries. To make the lender feel confident in their investment you will have to meet their individual standards to qualify for a loan.
Financial Records
The first thing you will need to qualify for your cannabis business loan are good financial records. These records include balance sheets, income statements, and bank statements. With these documents they are looking for information about how you handle your finances, how much you will need, and if you are responsible with your money.
If the lender decides that you are a trustworthy candidate, they will then use this information to determine how much you will be able to borrow and at what interest rate. The more money you have and have shown that you can pay, the more you will be able to borrow and the lower the interest rate. If you prove with these financial records that you are a reliable business owner, you will be very likely to qualify for a loan.
Credit Score
With any loan or financing option you will be required to have a credit check. Your credit score should be fair to high to receive a good loan. The better your credit score the better your loan offer will be. The credit score is also an important piece on the road to qualifying for a loan because it shows a more holistic record of your reliability with paying off debt. This however could be detrimental if you have previously done a lot of your business in cash and not taken many traditional loans or financing. Before trying to qualify for a cannabis business loan, you should make sure to build your credit score.
Management Personnel
The business itself is nothing without the people running it. To qualify for a cannabis business loan, you will have to submit the names of the key management personnel in your business. This is so each person can have a credit check to ensure their financial stability. If each member of your team, or collectively as a team you have a substantial credit score and financial history, you should be set to receive the loan that you are looking for. The more information that the lender has on you and your business, the more confident they can feel in lending you such a large amount of money.
Active Cannabis Licenses
Another thing you will need to qualify for a cannabis business loan is an active cannabis license. You will have to submit all of your active cannabis licenses to the financing company to see. This will show the lending company that you are a legalized business and that they will be in business with a credible business. The lending company does not want to be associated with illicit activities. The licenses will also show the lending company that you are ready to begin working as soon as you receive the loan and that there will not be a lapse in payment to them if you are not ready to begin business. The lending company wants to ensure that they will be compensated for their loan and will not be let down waiting for you to get your business in order.