Cannabis Cash Advance

What Types of Cannabis Unsecured Business Loans are Available? Non-Dilutive Cannabis Cash Advance

What is a Cannabis Cash Advance?

A cannabis cash advance is typically structured as a Purchase of Future receivables or projected sales.  This is one of the best options as a cannabis unsecured business loan. A funder will advance a fixed “lump sum of money” over a specific term, projecting the future revenue of the business.  

The specific amount of future income purchased is known as the total payback to maturity.  The purchase amount is the total amount a borrower will pay back over the given term.  

Payments are fixed and typically collected automatically via ACH on a daily, weekly, bi-weekly, or monthly basis depending on the overall risk profile.  Payments can also be collected from credit card sales based on a specified percentage of daily or weekly credit card sales. 

The Pros and Cons of a Cannabis Cash Advance

PROS

  • Minimal Paperwork & Easy Approval

  • Quick & Fast Funding

  • Suitable for a Wide Range of Business Purposes

  • Prepayment Discounts for Early payoff

  • Some cases just corporate guarantee 

CONS

  • May Require A Blanket Lien

  • Annual Costs can be Higher than Longer Term Loans

  • UCC may be Filed on Business

  • Expensive Cost of Capital 

Best Debt Capital Option for Cannabis

Non-Dilutive Capital

Are you wondering what the best debt capital option is for you as a cannabis business owner or ancillary business related to marijauna?  Banks will not lend to the cannabis industry until cannabis is legalized on a federal level.  It can be difficult for cannabis operators and dispensaries to find funding, whether it is debt capital or equity capital and partners.  The best option is always non-dilutive capital for a cannabis owner because of the market opportunity in the marijuana industry.  In the long run (down the road) equity capital will cost you much more than any debt capital or cannabis cash advance. 

What Does A Cannabis Cash Advance Cost?

Non dilutive cannabis cash advances are sometimes the most viable option for a cannabis company to grow and use working capital. Cash advances are not a loan, and are based on the cash flow of the business. In order to receive a cash advance at a good cost of capital, the dispensary or cannabis operator will need to show strong revenue and growth potential.  Upwise is looking to deploy capital into the cannabis industry to experienced operators and companies with a vision to grow.  The cost of capital and factor rates vary from 1.10 to 1.36, and terms typically are approved from 6 to 12 months on a first time deal.  Upwise can lend up to $10MM unsecured in house on our funding platform and will typically lend 75% to 100% of monthly average gross revenue. 

The Convenience Factor

We can have funds wired into the business bank account typically within just one or two days, so if you need quick cash on a short-term basis, it may be a good option.  Unsecured cannabis business loans are a great option for cannabis operators to capitalize on quick opportunities.    However, cash advances are typically one of the most expensive ways to fund your business.  You’re paying for the convenience of having access to the unsecured capital quickly. 

Upwise Non Dilutive Cannabis Cash Advance 

Funding Amount:  $10k – $10MM 

Rates:  Factor Rates range from 1.10 up to 1.36

Terms:  Estimated payback periods are 4 to 24 months, Typically 8-12 months

Prepayment Discount Offered:  No Prepayment Penalty 

Fees: 1% to 3% Origination Fee

Payments:  Daily, Weekly, Bi-Weekly, and Monthly 

Credit Score:  All Credit Scores and Profiles are Considered from Poor to Excellent

Documentation:  Simple One Page Application, 3 to 6 months of business bank statements (Financials required for over $100k Advance Amount)

How Upwise Is Different

What differs Upwise Capital from everyone else in the marketplace is our prepayment discount.  We offer the most aggressive prepayment discounts in the industry starting as low as 3 points per month.  Upwise has been funding cannabis businesses since early 2014 and has more experience in the industry than most firms.  Whether you are plant touching or ancillary, Upwise has debt options available for your business. 

Other Types of Debt Capital for Cannabis

Cannabis unsecured business loans can be used for any use of funds to grow and expand the operation.  Other types of debt loans and facilities available to cannabis business owners and marijuana related businesses included equipment financing, sale leasebacks, construction financing, purchase order financing, and senior debt facilities.  Whichever debt vehicle you chose as a sophisticated cannabis business owner, make sure to do your research and work with a firm that can offer multiple products like Upwise Capital.  

Don’t hesitate to call a funding manager at Upwise Capital to ask about debt capital solutions for your cannabis company at 646-837-5522 or email [email protected]

 

So…What do you think? 

We want to hear from you.  What do you think of this article and was it helpful in your search for debt capital for cannabis companies?

Let us know by leaving a reply below.   Feel free to share this article on your social media. 

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