Cannabis Equipment Financing: Private Lending Program Highlight for Small to Mid-Sized Cannabis Operators
When it comes to equipment financing options for cannabis operators options can be more limited due to traditional lenders being more focused on real estate. Equipment just isn’t their “thing” for the most part.
Fortunately, private equipment lenders are more than willing to fill the void. Today we’ll break down this cannabis equipment lending program from one of our private lending partners so you know what they offer, and who fits their lending criteria.
What This Cannabis Equipment Lender Offers
This lender focuses on small and mid-sized cannabis businesses looking for a direct equipment lender with a financing request in the $100K to $2M range.
They offer financing in all 50 U.S. states with the caveat that the health of a particular state’s industry will factor into approvals at that given time.
In addition to working with established companies, they will also fund pre or early revenue cannabis companies so long as there are personal guarantors with enough income and cash reserves that can service the debt if the company cannot. They will also require enough liquidity injected into the business to support the business while you move towards increasing revenues.
In the event you are a public company this lender can still work with you knowing that personal guarantors won’t be available, but your financials will need to be a bit stronger in demonstrating your ability to service the debt.
Cannabis Equipment Loan Program Highlights
Let’s break down what this program actually offers and whether it could be the right fit for your cannabis company.
- Loan amounts from $100K up to $2M
- Terms of 1 to 3 years, with extensions available to 4 or 5 years
- Rates range from 9.5% to 13% depending on strength of the borrower profile
- General loan to value of 50% to 75%. However, they can fund up to 100% LTV including soft costs strong borrowers
- No minimum time in business or minimum revenue required
- Personal guarantee not always required. Public companies and multi-guarantor structures are welcome
- Sale leasebacks available at fair market value for durable equipment less than 2 years old
How Does This Compare to Other Cannabis Equipment Lenders?
Let’s put this program in context by looking at what the cannabis equipment financing landscape actually looks like for most operators today.
Starting with rates the going rate for cannabis equipment financing has hovered around 12% for average risk profiles, and that benchmark has been consistent for years.
This program’s range of 9.5% to 13% sits right around that number, which means a well-qualified cannabis operator has a genuine opportunity to land at or below what the broader market would offer them.
When it comes to how much you can actually borrow against your equipment, most cannabis lenders top out at roughly 75% LTV on the equipment value alone. Soft costs are typically on you. This program goes up to 100% LTV for businesses with sufficient liquidity, soft costs included.
Although we are seeing some lenders start to offer 4 to 5 year repayment terms, the 1 to 3 year initial term with available extensions is on par with most cannabis equipment lender programs.
Is This Financing Program Right for You?
This is a strong option for cannabis operators who need equipment financing and want a lender that looks beyond the standard checklist.
Labs, manufacturing facilities, dispensaries, and cultivation operations at any stage are welcome including pre-revenue companies with solid cash reserves.
If you need 100% coverage including soft costs or want to unlock capital from equipment you already own, this program has a structure for both.
Contact us today for a free consultation and find out if your project qualifies.
About the Author: Daryl Eames is the founder of Loanviser and the NH Cannabis Association. He has advocated for cannabis legalization in the state of New Hampshire and has deep experience in cannabis financing and cannabis merchant processing, servicing the cannabis industry since 2019.
