The hemp business has taken the market by storm. Although it is illegal under federal law, it has been sanctioned under state law, and this has helped the industry grow strong roots with a promising future. However, due to the duality of the law, some risks have been a firm reason for banks and traditional loan lenders to step away from this sector.
Besides, you can also find private lenders who are willing to give you the capital for both fixed and variable rates. If you are an entrepreneur looking to set foot in the cannabis industry, this article will give you a clear insight into the world of the hemp industry and how you can avail of loans to jumpstart your business!
What do you mean by hemp equipment financing?
Hemp equipment financing refers to the capital provided by alternative or private lenders to purchase equipment required for hemp production, manufacturing, delivery, sales, etc. When you decide to loan a lump sum amount for your cannabis business, your lender may offer you variable and fixed interest rates.
Fixed rates are safe and a better choice since the interest rate remains the same throughout the contract. However, if you are in for the risk, variable rates can be your best bet. Variable rates can change at any point in time and have lower monthly payments.
What are the benefits of hemp equipment financing?
The business is booming and it is raining green! But wait! Is that it? Well no. Your cannabis equipment scheme can get you a wide array of benefits.
1- Better Cash Flow
Purchasing cannabis equipment can put a strain on a business. The cannabis industry is a layered business. From production, manufacturing to delivery, a business requires a lot of machine power to carry out a successful operation. Hence, buying all the equipment might not be the best idea. This is where hemp equipment financing can help your business. The best perk these loans offer is the collateral. The equipment you purchase acts as your collateral.
2- Storing other lines of credit
Since hemp equipment loans provide you with the capital you require for your business, it thus helps you with preserving the other lines of credit. Hence, you have good capital while maintaining better relationships with your lenders.
3- No inflation
Choosing hemp equipment financing can help you stay away from inflation. With hemp equipment loans, you can make sure your cash remains free which can be used during a crisis or for future investments.
How can you get a cannabis equipment loan?
Unlike traditional loans, hemp equipment loans require a borrower to undergo a lot of formalities. Before you begin with the loan application, lenders require you to show the reason behind the purchase or the need to upgrade it. In addition, you have to get a quote on the price of the equipment from the vendors. For a successful loan, you have to submit your application along with the documentation required by your lender. Since these loans are mostly offered by private lenders, the eligibility criteria may differ from each other.
After the approval, entrepreneurs require to sign a legal contract to acknowledge the terms and conditions set by the financing company or lender.
Which cannabis equipment requires financing?
Cannabis cultivation requires a lot of equipment. From a greenhouse setup to manufacturing equipment, there are a lot of aspects to consider. While you may not be able to get paid for all the equipment, you can still save a huge capital on some of the major equipment.
Some of the equipment that you can finance are:
- Security equipment is crucial to ensure your investment is kept safe.
- HVAC equipment is required for the production of cannabis. They take care of temperature control, humidity, airflow, etc that is important for hemp growth.
The cannabis industry is on the rise. So, is the age of entrepreneurs. Are you an entrepreneur looking for a breakthrough in the cannabis industry? Well, what are you waiting for? Start your research and look for hemp equipment financing options. Make sure to interview every one of them for a better comparison.
Moreover, don’t forget to look for additional perks that some lenders offer. Some of the common perks include no prepayment penalties, delayed payment, etc.