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Watch The Video: Unlock Cannabis Funding With Straight Line Source

So you took a leap of faith in an emerging industry when your state legalized cannabis for medical, recreational, or both purposes. But weed is still federally legal. Your business is growing, and you need capital to keep up with demand, or maybe your business went through a tough period that you need to get through. In order to keep up with everyday expenses like payroll, marketing, rent, new equipment, or inventory, you need some working capital.

Maybe you have a medical marijuana doctor clinic that wants to expand into new states, but in order to do so, you need access to liquidity, and almost all traditional banks do not lend to cannabis businesses, with some minor, infrequent exceptions. We have witnessed and heard the market participants "cry" far too many times about the numerous challenges they experience.

10 Challenges Cannabis Businesses Face When Securing Working Capital:

• Limited Banking Access: Federal prohibition means most banks avoid cannabis businesses, restricting traditional loans and lines of credit.
• High Interest Rates: Alternative lenders, like private investors or credit unions, often charge higher interest rates due to perceived risk.
• Cash-Intensive Industry: Inventory, cultivation, and security require upfront cash, leading to a high cash burn rate and tight operating budgets.
• Complex Regulations: Evolving state and local regulations add compliance costs and uncertainty, impacting lending decisions.
• Unfavorable Tax Treatment: Section 280E of the IRS code limits deductions for most expenses, affecting profitability and financial statements.
• Short Payment Terms: Cash-only transactions and limited credit card processing slow down revenue collection and strain working capital.
• Lack of Financial Data: Many new businesses lack established credit histories or audited financials, making it harder to secure funding.
• Increased Competition: A growing market attracts larger companies with access to established financial resources, impacting smaller players.
• Shifting Consumer Preferences: Evolving market trends and product demands require adaptability and innovation, which can necessitate additional funding.
• Negative Public Perception: Stigma surrounding cannabis can deter some investors and lenders, despite its legalization in several states.

Sound familar?  These challenges create a complex landscape for cannabis businesses seeking working capital. However, creative solutions like factoring receivables, alternative financing, crowdfunding, and strategic partnerships are emerging to help navigate these obstacles and support the industry's growth.

Alternative Financing Routes for Cannabis Businesses

Running a cannabis business is expensive, and traditional financial institutions tend to avoid financing this sector due to federal laws. Straight Line Source (SLS) offers a solution with Merchant Cash Advances (MCA), which is a different form of financing where funding companies make a decision based on your repayment ability, which is based on your credit and debit card sales.

• If Your Business qualifies, You Can Fund Within 24 Hours of Submission
• SLS has a network of alternative financing companies that are willing to fund businesses that are in industries that are considered high risk like the cannabis industry.
• If your cannabis business accepts credit or debit card payments or has consistent monthly sales, it may qualify for a cash advance. 

As the business thrives, the advance is repaid quicker. Unlike traditional financing, the MCA is uncollateralized, and because of this, submissions tend to require less documentation, often just an application and the last four months of bank statements.

Cannabis Business Qualifying Criteria:

• $20,000+ Monthly Revenue
• 600+ Fico
• Daily Balances
• Frequent Deposits
• Little to No Days With Negative Bank Balances  

Funding Application: Have These Items Available

• Last 4 months of bank statements (some providers might require 6 months)
• Tax ID
• Social Security Number
• Email + Phone Number
• Invoices if you are looking to factor specific receivables
• Annual Revenue

What To Know After Applying

• An agent will reach out to you to discuss your needs and goals within a couple hours.
• We work with our funders to get you the best terms
• The best offers are presented to you
• If you agree, contracts will be requested and signed
• You will have a funding call
• Funds are disbursed.

What to Know After Receiving Funding Approval Terms: Prior to Getting Funded

• After Being Pre-approved: Send Your Funding Specialist These Items:
  • Driver's license, a state or federal ID
  • Voided check from the designated funding account
  • Daily, weekly, biweekly or monthly

• Payment Frequency: Daily, weekly, biweekly or monthly payments are deducted from  your bank account based on your sales

What's Next?

• Your funding specialist will arrange a “funding call” for bank verification
• The funder will review the necessary details to approve the cash disbursement
• The funds will be transferred to your bank account almost immediately

If your cannabis needs access to quick working capital and you have been in business for a year and are generating a minimum of $20K in revenues monthly on a consistent basis, there is a 'light at the end of the tunnel," and your business expansion dreams are still possible.