Loans, Financing, And Capital For Cannabis & Hemp/CBD Retailers & Dispensaries
Opening a cannabis retail store or dispensary comes with a lot of costs. Some of the biggest items on your budget include commercial real estate, payroll, merchandise, and taxes.
While opening cannabis retailers and dispensaries can seem intimidatingly expensive, the industry has an exceptional return on investment (ROI). As long as you follow your state’s regulations and keep up with trends in the industry, you should find that your business can thrive.
Still, few people have enough cash to open a cannabis storefront without relying on loans and other types of financing. Canna Business Resources can help you compare your options and choose a cannabis loan that helps you meet your business goals.
Types of Loans and Financing for Cannabis Retailers & Dispensaries
Cannabis retailers and dispensaries can apply for a wide range of loans and financing. The following sections will address some of the most common expenses that require help from private lenders. You may not need all of these financing options, but you will almost certainly need some of them.
Commercial Real Estate Loans
The price of commercial real estate for cannabis stores and dispensaries can vary considerably depending on factors like location and whether you have a license to sell products for recreational or medicinal use. More often than not, you can expect to pay the highest prices for recreational cannabis stores in densely populated places. These highly desirable locations can easily cost more than $1 million to purchase.
Commercial real estate loans for cannabis properties make it much easier to pay for a location that will help your business become profitable.
When borrowing money for commercial real estate, expect to find:
- Loan amounts between $500,000 and $25 million.
- Three to six points in fees.
- Options to cover up to 70 percent of the property’s appraised value.
- Loan terms between 6 months and 10 years.
- Interest rates between 7 percent and 15 percent.
All of these expectations are subject to your qualifications. If you have an excellent credit rating and a proven record of success in the industry, you could potentially get a loan for more than $25 million with a term over 10 years.
Every dispensary needs equipment to operate efficiently and legally. While you probably will not spend as much money as someone buying equipment for an indoor grow operation, you still need to purchase things like:
- Shelving and display cases.
- A robust security system with cameras and sensors.
- A ventilation system (if your area lets customers enjoy a smoking lounge).
- Age verification that ensures you never sell to anyone under 21 years old (for recreational cannabis).
- A vault for keeping cash safe (especially if you operate a cash-only store).
- Signage that attracts customers, helps them chose products, and explains rules.
Most lenders offer equipment loans between $100,000 and $25 million. Expect to pay an interest rate between 6.99 percent and 19.99 percent.
One of the great things about equipment loans is that qualifying applicants can get financing that covers the entire price of the items. In a “lease-to-own” situation, you don’t technically own your equipment until you repay the full balance. It’s an intriguing option for entrepreneurs starting cannabis businesses on shoestring budgets.
Working Capital Loans
Even successful cannabis dispensaries and retail stores can experience times when they worry about paying for all of their expenses. When you need to pay your staff, purchase new merchandise, and upgrade your security system in the same month, you might find that you barely have enough money to cover the bills.
Working capital loans let you borrow relatively small amounts of money so you can continue operating without concern. Instead of skipping a payment and putting your credit rating in danger, you get quick access to working capital that pays for everything on time. Then, you can repay your lender once you recover from the financial setback.
What to Expect From Cannabis Retailer Loans and Financing
When you apply for cannabis retailer loans or financing, you can expect to provide quite a bit of information about your business and yourself. Private lenders might want to look at your credit history, your business’s financials, and whether you already have outstanding debt.
Take some time now to get your financial information in order. You want to give a positive impression that makes the lender feel comfortable offering you a loan with a low interest rate. Private lenders can charge practically any rate they want, but they have to compete with each other to get your business and make money. If you don’t feel that you have gotten a fair offer, reach out to other lenders to compare your options.
Start the Borrowing Process With Canna Business Resources!
The federal government does not let banks and credit unions loan money to businesses in the cannabis industry. Luckily, private lenders fill that gap, giving businesses access to the funds they need to grow.
The borrowing process can feel intimidating to many cannabis retail owners. Using Canna Business Resources simplifies the process. Start by filling out an inquiry that provides essential information about your business and lending needs. A consultant will reach out to you shortly to help you navigate your options.
You don’t have to compare cannabis industry loans alone. A Canna Business Resources consultant can walk you through each step to make sure you choose a dispensary loan that matches your needs and budget. Get started now by submitting an initial inquiry.