Smart Funding-Strategic asset-building is the way to go when financing your cannabis business.

Smart Funding-Strategic asset-building is the way to go when financing your cannabis business.

Debt often comes with negative connotations, but savvy business owners know that it’s an integral part of their foundation story. Without debt there is no credit and in many cases without both of these elements, there is no business. Starting a cannabis business requires a lot of overhead. While some cannabis businesses may be able to get by self-funded or by crowdfunding, most scalable operations will require a sizeable amount of capital to reach profit.

With the regional disparity in legislation, cannabis entrepreneurs only have a few other options when it comes to raising that capital: investors or lending. While it may seem like a dream to have a team of investors that believe in you and your business, there are downsides to going down the investment route. With an investor attached, you are agreeing to give them a piece of your hard earned revenue and adding another person that major business decisions need to run through. Most notably, having an investor involved may complicate your long term goals such as selling your business or growing your profit margin. Being smart and strategic about how you fund can not only get your business off the ground, but also set you up for long term success.

Turning Debt into Assets 

Business plans tell a story. Realistic business plans account for time spent in the red and provide a road map to achieving profit. What valuable items can you lend against to create assets in the long run? In order to obtain an equipment or real estate loan, the item you are lending against must have market value. In the event that borrowers are unable to make their payments loaning capital toward items with market value give lenders the potential to resell the property or equipment if faced with this; however, that shouldn’t be the case. At Lender420.com, we have a very thorough underwriting process and work tirelessly to set our borrowers up for success with loans they can comfortably afford.

Equipment Financing

Equipment financing is a great way to turn your debt into assets. Taking out a loan against your equipment will help you afford exactly what you need to get your business running. Too many business owners try to cut costs by opting for less effective and expensive equipment. With equipment financing, not only can you invest in the best, but you are also thinking long term and working toward turning that equipment into an asset. This will eventually grow your profit margin or provide your business with an additional asset if you are looking to sell your business or just the equipment itself if you need an upgrade down the line.

We are frequently asked what kind of equipment we finance. Although lights and cultivation equipment are essential to the cannabis business, these lower-price point items usually fall under our unsecured capital funding program. Extraction equipment is a great place to start when looking to finance equipment with a resale value.

Real Estate

Real Estate is always a good idea if you’re ready for it. Although it’s a major commitment and shouldn’t be taken lightly, real estate can be a major asset for your company if you’re in a position to invest in it. Financing your real estate is a more-affordable way to pay for your business headquarters. Leases that are 420-friendly can be steep. Owning your own property and paying down a mortgage is more cost effective and adds value to your business overall. 

There are a few requirements that business owners must meet to purchase real estate. Firstly, you must have a downpayment. Typically, businesses that have been around for a few years are more prepared for this type of investment, but in some cases, we can help startups with this using our FICO-based program. Just as lending should be built into one’s business plan, business owners should spend a good amount of time reflecting on if real estate is the right investment for them.

Lending Experts

Lender420.com is a direct lender, syndicate, and brokerage firm and offers so much more. Our staff is consultant-minded and works tirelessly to help clients get the most advantageous loan possible. Founded by a team of long-time bankers, we are knowledgeable about the pressure point that lack of funding presents to the cannabis industry and we are focused on alleviating this and helping more and more businesses obtain the funding they need. Our success stories are 400 and counting. Will you be the next?

For more information on our loan programs, visit us at Lender420.com, email us at info@lender420.com or call us at 424-256-3090. 

December 15, 2019 / by / in
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