The long run: credit and the cannabis business
Fight for money
For most people, applying for a loan is stepping out of your comfort zone, endlessly proving your solvency, information about your personal, work and payment history, intentions and visions. On the one hand, this is logical. The bank needs assurance that you will become a reliable and trustworthy client. It lends you money in the order of hundreds of thousands or millions of crowns and creates a commitment for tens of years ahead. On the other hand, maybe it scrutinises all the documents too closely, knowing that it is an idea to start a cannabis business. This is a category that requires heightened vigilance. Some cannabis ingredients are on the edge of the law, others even beyond it. Vigilant oversight is easy, but unfortunately it is very restrictive for the client.
In the US, a few companies have successfully attempted to "break" the impenetrable barrier of banks making it difficult for clients to get credit to start and grow a cannabis business. As a result, entrepreneurs do not have their hands tied and can take advantage of all financial products to a much greater extent. But still not as much as competitors focusing on a different ("safe") segment of the market. In Europe, such an approach is not necessary. Different countries take different approaches to cannabis and its constituents such as THC, CBD or more recently HHC, but the conditions are nowhere near as strict and confusing as in the US.
Getting a loan for a cannabis business is not easy, banks do a good job of vetting everything.
The cannabis business is one of the fastest growing in the world and there are more and more producers, sellers and users. However, the banking sector is unable to meet the demand and has to select only the ones with the best prognosis from all the business plans. So if you want to succeed, you need to prepare well. Of course, this also applies to those who want to take out a loan during the business (not just at the beginning). Order, order and skilful interaction with authorities and institutions are the cornerstones for smooth negotiations.
Business plan
For the bank and a smooth and seamless business, you need to create a plan on how you will proceed, what and how to finance, what your goals are. Don't forget crisis management, staffing issues and short and long term outlooks. When approving a loan, it is important that the bank verifies that you have a clear idea.
Equity
It's illogical. The bank requires your funds and you are asking it for a loan. However, it is a protective mechanism and a guarantee that you are not entering the world of business completely penniless and dependent only on other people's resources. Solvent guarantors or real estate collateral can serve just as well as your own financial cushion.
Cooperation with the authorities
It takes weeks to process a loan application. In the case of a business start-up loan, even longer. You will have to provide countless certificates and fill in a lot of forms and documents. It can be tedious and seem redundant, but patience and skillful responses to the bank's suggestions will pay off.
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