In an ever “Cannabis” growing industry, the easement of U.S. Laws provides the power for exponential growth as more states are likely to legalize marijuana. Still, there are many restrictions, specifically in terms of cannabis equipment financing. The Cannabis, Hemp & CBD industry faces obstacles from federal regulations that successively make obtaining financing from the normal FDIC insured banks almost impossible. With traditional loans having restrictions from the government, cannabis businesses are forced to figure out alternative lenders like Zena Financial, private specialty lenders, credit unions in their state, and/or equity investors and capital investors.
These private and institutional lenders are now providing debt options to MRB’s (Marijuana Related Businesses) to undertake and maximize the Cannabis industries growth. Many cannabis businesses consider farming, laboratory research, extraction of THC or CBD for edibles or products and dispensing among other sectors. There are numerous different industries within the Cannabis, CBD, and Hemp industry. No matter which market niche is your focus, the proper loan for your business can boost your productivity and sales drastically.
What Cannabis Equipment am I able to Finance?
Equipment financing plays an enormous role for a Cannabis business to work and grow. Equipment that has the possibility to be financed for MRB’s may include but isn’t limited to cultivating equipment, harvesting equipment, processing equipment, retail fixtures, greenhouses, other supplies, business systems, trucks, etc. When trying to find equipment to get for your business, consider if new or used equipment is best for your specific needs. You’ll got to find out, the sort of apparatus you’re trying to find and where you’ll purchase that equipment. Getting an invoice or quote on the precise equipment is typically needed.
Many companies concentrate on selling used cannabis grow equipment and greenhouses at a reduction. Tons of MRB’s are cash heavy, but simply because you’ve got the cash to shop for something outright doesn’t mean you ought to. That cash could also be better spent elsewhere counting on your business goals and return on investment. Equipment leasing programs and term loans allow you to pay off equipment over 2- 8 years on a monthly payment structure at a very low rate of interest. There are a couple of options to think about once you’ve made the wise decision for your business.
Equipment Financing Options in 2020
What should be determined next is that the best route for receiving the equipment. Cannabis businesses can use capital, bridge loans, or a merchant advance to outright buy the equipment or go the route of leasing or financing the equipment from an equipment financing lender. This will be determined by how you’re using the equipment. Is it something that must get replaced after one year? Or, is it something which will be used year after year? what’s the worth of the equipment year after year? Determining the depreciation of your equipment and your ROI will help to gauge the simplest financing route for your business. MRB’s also can leverage other assets like commercial land, crop, licenses, and accounts receivables to secure financing to get equipment. Sale lease backs are a standard option employed by cultivation facilities, grow operators, and cannabis companies. A “sale/leaseback” or “sale and leaseback” may be a transaction utilized in the marijuana industry during which the operator sells an asset, typically land, or equipment, then leases it back from the buyer. This specific sort of transaction functions as a loan, with payments taking the shape of rent. Also, refinancing existing equipment can provides a cannabis business owner access to the cash needed whenever they have it, since it’s difficult for an MRB to secure a line of credit. Regardless of how you chose to finance the equipment needed to assist grow your business, make certain you think about all options. Zena Financial’s knowledgeable staff can assist you to navigate the various equipment financing products available to cannabis businesses, even though you’re a start-up business or new operation.
Zena Financial Conclusion: Cannabis Equipment Financing
The cannabis industry could also be an emerging market with unlimited growth potential creating many jobs and tax dollars, but the normal financial industry has not fully embraced cannabis companies. As more and more states accept cannabis use for medical and recreational use, maybe the normal banks and SBA will change their stance of funding this moneymaker.
Currently, many beneficial MRB’s that ought to be qualified for low rates over long terms will need to procure it. The value of capital for cannabis companies is inherently costlier strictly thanks to the federal regulation and bad name that cannabis companies have. Most banks consider the cannabis industry to be restricted, so be sure you to do your research when considering a lender. Search for companies with experience in funding the cannabis industry and knowledge with cannabis equipment financing like Zena Financial. Using an equipment financing service through Zena Financial to finance your equipment can help to unlock income for other business operations and opportunities. The power to maneuver and go searching for multiple offers with one company are some things you’ll want to think about when applying. Before you apply, do your research, and ask as many questions as you need to determine the best lender for your specific needs.
Contact us today!