May 18, 2022
Have you decided to expand or set up a new cannabis business in Canada? If yes, you may have also heard that it can be difficult to obtain cannabis business loans in Canada. Undoubtedly, the cannabis industry is continuously growing and you also want to thrive well with the industry. But, being unable to get proper funding can create a roadblock right from the beginning and make it even harder for you to sustain. However, if you are persistent with your cannabis business idea, this guide will help you understand why it is hard to get a cannabis business loan, what options you have, and where you can get financing to jumpstart or expand your cannabis business.
The straightforward answer is the federal regulations. Even though cannabis has been legalized since October 17 2018 under the Cannabis Act, traditional banks still largely remain off-limit to the cannabis industry because cannabis regulations and laws vary from one province to another. To understand what is legal and what is not legal, you will need to get a grasp of both the federal and provincial laws.
Not only banks but even private investors are a bit wary of funding cannabis businesses. The reason behind this could be the stigma related to cannabis for being under controlled substances for several decades. Plus, it could also be due to tight legislation and regulations across the country. While the production, possession, and sale of cannabis in Canada are no longer prohibited by the Controlled Drugs and Substances Act, there are still limits on growing, possessing, using, and selling marijuana.
Other reasons that make it challenging for cannabis business owners to get traditional loans include:
· Potential risks related to reputation
· Non-compliance of the borrower with applicable law
· Restrictions on the ability to grant security over a license to produce cannabis as Health Canada has restricted the transferability of the license
· Various limitations on enforcement of collateral as directors, officers, and other personnel need to get security clearance from Health Canada
However, it doesn’t mean that you cannot get financing for your cannabis business. You still can. Let’s check out what options you have.
As the cannabis industry continues to flourish and thrive at a sharp pace, these difficulties have prompted cannabis business owners to resort to alternative financing models. Since the cannabis business is capital intensive, it spurs the need for innovative financing solutions to meet the evolving needs of cannabis business owners.
Cannabis business loans can be obtained from private financiers, such as Hedge Funds. They fall outside the perimeter of traditional lending channels and hence don’t have to adhere to traditional lending policies and procedures. It is easier to get cannabis business loans that are privately funded. It means you can still get funds when you hear “No” from typical banks.
Apart from this, you have several other options to grow your cannabis business with private debt financing. Some of these are:
· Cannabis real estate loans - to buy or refinance the land or buildings that you need to run your cannabis business
· Cannabis equipment loans - to pay for the tools, equipment, and supplies that your cannabis business needs for production, extraction, lab testing, and packaging operations
· Private equity financing - to acquire retail dispensaries, manufacturing facilities, and cultivation facilities
· Revenue-based cannabis loans - to quickly fuel your cannabis business with cash
· Personal loans - those who have a good credit history might get approved for a personal loan that can be used to finance cannabis business
· Business Lines of Credit - to help cover ongoing expenses of your cannabis business
Since the Canadian cannabis policy and legislation have been updated in 2018, the number of small businesses interested in the cannabis industry has exponentially grown over these years. More and more small businesses are jumping into this industry to mint money and make profits because of the skyrocketing demand for cannabis across the country and globally.
So, if you are looking for an easier and faster way to apply for and get cannabis business loans, all you need is to connect with Royale Capital.
Royale Capital is the one-stop destination where you will have different affordable lending options and their professionals will help you choose the one option that is right for you and your business. So, if you don’t have a good credit score or you have been denied a traditional business loan, don’t worry. Royale Capital can help you.
We understand that when borrowing, finding the right lender is critical. And when it comes to obtaining funds for your cannabis business, it can be even more challenging to find a lender at all. However, once you get in touch with Royale Capital, you don’t need to go elsewhere. Why? Let’s find out.
· Has a large network of lenders who are happy to fund cannabis business owners
· Works with lenders that offer competitive interest rates and fast closing times
· Offers diverse and creative lending options that meet your specific needs right from real estate to equipment to day-to-day operations
· Doesn’t require you to hold a good credit score
· Has a team of dedicated professionals with experience inworking with cannabis business owners
· Helps secure the funding in as little time as possible
· Assist you in getting a quick flow of cash to achieve your cannabis business goals
· Is highly transparent about if it’s possible for you to get a business loan quickly and doesn’t waste your time
· Has a transparent and fair fee structure so you don’t need to worry about the budget
When it comes to getting cannabis business loans in Canada, you don’t need to look further than Royale Capital to get seasoned financing advice and solutions to grow your cannabis business.