3 Types of CBD Business Loans
As more entrepreneurs continue entering the cannabis market, there is an increasing demand for CBD business loans. These loans provide the capital needed for launching and developing entities that depend on CBD (cannabidiol), the non-psychoactive compound found in cannabis plants that has numerous medical uses. Like all sectors of the cannabis industry, CBD businesses are projected to experience rapid and significant growth beginning this year.
Types about CBD Business Loans
It’s challenging to obtain any type of funding for starting or expanding a cannabis-based business. There is still a load of red tape to deal with when making loans in this industry because marijuana remains federally prohibited. Until national decriminalization occurs, traditional lenders are unable to offer cannabis funding. However, there are some good options for getting a CBD business loan, hemp business loan, or another type of weed loan.
CBD Business Loan Option 1: Bridge Loans
Bridge loans are also called “gap financing”, swing loans”, or “interim financing”. They are short-term loans a company can utilize while awaiting permanent financing solutions. They allow businesses to meet immediate financial obligations but typically have high interest rates. These loans require collateral in most cases. The money can be used for rent, inventory, utilities, working capital, and other expenses that a business needs to cover quickly.
CBD Business Loan Option 2: Merchant Cash Advances
A merchant cash advance isn’t technically a loan. Rather, it is funding that is advanced to a merchant based on upcoming credit card and business debit transactions. Cash advances are short-term funding solutions that can provide extra working capital to sustain a business through challenging financial situations but doesn’t provide a permanent funding source. This financing option depends largely on strong, consistent revenue statements.
CBD Business Loan Option 3: Private/Alternative Loans
Non-bank lenders are the most common funding sources for CBD business loans and other types of weed loans commonly sought after within the cannabis industry. These private lenders all have their own requirements for applicants. It’s important to research these requirements before applying for a loan.
For example, some alternative lenders might not fund growing and cultivation operations but might be fine with funding the production of CBD edibles, concentrates, vape cartridges, and other similar products. Make sure that a lender you are considering for a loan is interested in the particular sector of the CBD industry that your business serves.
Cannabis Credit Lines caters to well-qualified candidates searching for attractive options for CBD business loans, hemp business loans, and cannabis business loans. Contact us today to discuss how we can help you get the funding you need to grow your CBD cultivation, extraction, of manufacturing operation. Call our professional team today or apply here.
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