It can be difficult to secure financing for any type of business loan, let alone a cannabis business loan. Because traditional banks don’t provide financing solutions to cannabis companies, you will need to work through a cannabis lender, like Canna Business Resources.
When working with a cannabis lender, filling out an application is the easy part, getting the approval is what can be difficult. Before you decide to apply, make sure you follow these best practices to increase the chance that your loan will be approved!
Tips to Securing Cannabis Financing
- Determine Your Budget
Determining your budget will help you get the best idea of what kind of financing you are looking for and give you a realistic amount. Asking for too much or too little could either put you in jeopardy of being denied, or not having enough to complete what needs done.
- Prepare a Proper Business Plan
With any lender, they want to know that you are serious about your investment. Having a proper business plan can increase your chances of securing a business loan because it shows you took the time to carefully think out and plan. Having a proper business plan can help ease the lenders mind and help them have more confidence in financing you.
- Work on Increasing Your Credit Score
This one is self-explanatory. The higher your credit score is, the more it shows lenders that you are reliable and will be a good partner to work with.
- Lower Your Current Debt
If possible, lowering your current debt could help increase your credit score, as well as lowering your expenses. If you have too much debt, it can bring in to question how you are using the provided funds.
- If Needed, Add a Co-Signer
Adding a co-signer is always a good idea, as it can help reduce the risks in the eyes of the cannabis lender. It’s also a way to qualify for loans that you alone may not be able to do. Before adding a co-signer though, make sure both you and the co-signer understand the risks. Co-signing is not something that should be taken lightly.
While these are all great ways of increasing the chance you get your loan approved, it doesn’t necessarily mean that there is a 100% chance. There are a lot of different factors that go into loan approval, so make sure you are doing everything you can to reduce risk and increase the chance your loan will be approved.