SMALL BUSINESS LOANS

Cannabis Term Loan

The Wise, Fast & Transparent Solution for your business.

Are You Profitable Or On Your Way? Then You Want A Cannabis Term Loan.

What exactly is a cannabis term loan? We’ll go over the costs, qualifications, process, use of proceeds, and more to help you determine if cannabis term loans are the best option to fund your small business growth.

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What is a Cannabis Term Loan?

A term loan is a lump sum of capital that you pay back with regular repayments at a fixed interest rate typically over a term between one to five years. The “term” in “term loan” comes from its set repayment term length or when the loan goes to maturity. Small business owners in the cannabis industry often use the proceeds from a Term Loan to finance a specific, one-off investment for their cannabis businesses.

Since these loans have lower rates and come in at a great cost of capital over a longer term, many cannabis companies use term loans to refinance high-interest debt. As long as the borrower’s credit and debt coverage service ratio meet the minimum requirements, Upwise will be able to secure term loans for the cannabis business.

Cannabis Term Loan Details

Maximum loan amount

$150K - $20M

loan term

1 - 7 Years

interest rates

10% - 25%

speed

As Fast As Same Day

Cannabis Term Loan Pros vs Cons

PROS

CONS

How Does a Cannabis Term Loan Work?

Most marijuana business owners have heard, that the cannabis industry has funding options and term loans are one of the best products for cannabis businesses, that want to expand. This type of cannabis business funding provides the cash a medical marijuana or a legalized recreational cannabis business owner needs to go to the next level. Funds from a cannabis business term loan can be used in a multitude of ways to help cannabis business owners grow.

Term loans are viable options for an established cannabis related business that is showing a profit on their most recent business tax return. No two cannabis businesses are alike and all cannabis business owners have specific capital needs. Upwise Capital’s funding specialists will be able to qualify your cannabis business for term loans very quickly.

As with any term business loan here, your use of funds and credit history are the most important aspects during the underwriting process. Businesses in the marijuana industry need to make sure their use of proceeds makes sense prior to applying for term financing options. We ask our clients to list out a breakdown, dollar for dollar on what specifically the funds will be used for before applying to financial institutions. If your a cannabis company and want to speak with one of our cannabis business funding specialists regarding your business financing needs, please call 77-55-UPWISE.

Who Qualifies for Cannabis Term Loan?

Securing cannabis business financing is no easy task and requires more paperwork than some other financing options.

So how can you get one?

Plenty of cannabis related businesses can qualify for cannabis industry term loans—as long as you’ve been in business for a bit, have a good credit score, and are reporting a profit on your most recent years’ business tax return.

(See more on a term loan’s minimum qualifications below.)

However, not all business term loans are the same: the length of the term, the interest rate, and the maximum loan amount will depend on your business revenues and credit profile.

Typically, most term loan banks or a cannabis lender will lend up to 30% of gross annual sales reported on the most recent business tax return with no collateral attached to the loan. In order to increase the loan amount, you can add collateral such as commercial real estate, equipment, inventory, and other assets to the loan.

Since cannabis industry term loans have longer repayment periods than say a merchant cash advance, your business’s financials, and credit score are more important.

Depending on your cannabis related businesses growth and any equipment purchases, financing needs, business operations, cash flow, personal and business credit score, revenue, EBITDA, net profit, DCSR, cash flow, and more, there are plenty of different term loans available on the Upwise Marketplace.

In fact, Upwise will assist you in securing business term loans with lengths and payment structures as varied as 1 year with bi-weekly payments to 5 years with monthly payments – and everything in between.

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Cannabis Business Term Loan Requirements

Annual revenue

Over $200k

Credit Score

Over 620+

Time In business

1+ Years

History

Profit Shown on Tax Returns

* Note: These term business loan requirements are based on previous Upwise customers and is just an average.

What Does a Cannabis Term Loan Cost?

Before applying, you should know how much term financing will cost you, no matter what type of debt financing you’re applying for in the cannabis market.

Terms Loans are easy to figure out and calculate the amortization schedule and tend to be one of the most affordable ways cannabis entrepreneurs can fund cannabis businesses.

Let’s take a look at a cost example.

Example of a Business Term Loan

Let’s say you’ve qualified for a cannabis financing term loan.

In this cannabis term loan offer, you’re borrowing $25K from a lender at a 12% interest rate and a 5-year term.

Given the longer length of that term loan, your likely to have a monthly payment of about $556. (Term loans can come with weekly and bi-weekly payments, too.)

That’s a predictable expense you can easily understand and plan your financials around.

Cannabis business term loans, similar to other financing options such as line of credit loans, can also come with fees attached to these business loans. These fees could be origination fees, underwriting fees, prepayment fees, and other fees.

Make a WISE choice with Upwise and don’t overlook fees and interest rates on your loan offer with other loan brokers. Be sure to factor in any and all small fees associated with the cannabis lender in order to understand the true cost of these cannabis loans. Upwise will make sure all fees are transparent and thoroughly explained prior to proceeding with any cannabis financing, whether it’s a term loan, line of credit, merchant cash advances or equipment financing.

Breaking Down Each Term Loan Payment

Here’s the thing with cannabis business term loans: not every payment goes toward the same thing. There is a specific amortization schedule for each term loan, with a certain portion of each payment going toward interest and principal.

Cannabis business term loans amortize, which means you don’t pay equal parts interest and principal (or the amount you borrowed) from month to month. Instead, cannabis lenders usually stack interest payments early on cannabis business loans, cannabis loans, or a cannabis business loan term loan and leave your principal payments for later on in the life of your cannabis businesses operations.

That way, even if you pay your loan off early and get the rest of the interest forgiven, you’ve still paid most of it to the cannabis lender. Make sure to ask your financial institution for an amortization schedule, so you know when is the best time to not pay interest on this line of credit loan. This means that you might save less than you’d think by paying your term loan off towards the end of the loan’s maturity. Most term loan lenders do not have a penalty for early payoff and some Term Lenders offer a pre-payment discount.

However, your monthly payment is still the same amount—it’s only the proportion of interest to the principal that changes.

How to get Cannabis Term Loan

We make it easy, simply apply online and we’ll be in touch to go over your options.

Safe & Secure

Documents You'll Need to Apply

Completed Application
Driver’s License
Voided Business Check
Business Bank Statements (Last 6 Months)
Credit Score

You may also be requested to provide the following for larger dollar amounts over $100K:

Balance sheet
Profit & Loss Statements
Business Tax Returns
Personal Tax Returns
Account Receivables Report (if securing AR)
Inventory List (if securing inventory)

A Cannabis Acquisition Loan allows you to buy an existing and hopefully profitable business. You can buy out an existing partner or purchase a well established business. For this type of loan, it's best to be purchasing a thriving company, that will be easy to prove low risk to the lender.

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Cannabis Term Loans

can be used for

Expenses.

Inventory.

Expansion.

Purchases.

No matter how much planning you do, owning a small business has its challenges. For established marijuana industry businesses showing a profit, you can tap into term loan cannabis funding if you have a good plan of what you’re using the money for.

When time is money, a business term loan is the amongst the best cannabis business loans that can get your business financing needs done in just a few days.

When applying for a cannabis loan, most cannabis companies feel their cannabis loan options can be limited, because of federal regulations, traditional bank loans and obtaining a bank account are even difficult. For a cannabis dispensary or new cannabis business, traditional financing options from traditional banks such as an asset based loan, invoice financing, working capital loans, real estate loans are almost near impossible to get since cannabis remains illegal at the federal level. This is why Upwise Capital has created the best cannabis funding options for your marijuana business or cannabis dispensary. We can even help you obtain a bank account with FDIC banks (federal deposit insurance corporation) or credit unions, a real estate loan, cash advance, line of credit or help prepare any due diligence for a cannabis lender.