Funding Your Cannabis Business When the Bank Turns Down Your Loan Application

January 4, 2020 Cannabis Business

Startups are a time-honored American tradition. Everyone is welcome to start their own business, with an infrastructure of a loan application and investments to help new ventures get started. Working the system, a new business can usually get enough funds to test the business result and see if it flies. But the cannabis industry is in an interesting place, with a patchwork of mismatched legality controversy. This can make business funding more tricky than usual.


Why Cannabis Funding Is a Challenge After Loan Application Rejection


At this moment in history, cannabis is nationally and globally controversial. Consider the situation from a lender or an investor’s viewpoint. National lenders have huge networks of clients and must be 100% legal in all states they do business with. Being seen to support the cannabis industry could have a huge impact on brand reputation alone. On the other hand, there are many other lenders, investors, and financial services that don’t make that distinction. From alternative business investors to purpose-built financial services, you can find alternate funding for your cannabis business.


Cannabis Friendly Lenders


The first place to look is with lenders and investors that specialize in alternative business. These will range from sources that specialize in cannabis business funding to those that simply don’t discern between business plans. While you may have had trouble with the big-brand national banks, try again with a more targeted approach.


Alternative Business Lenders


Some banks and lenders don’t follow the same business plan as the big national banks. Look for independent lenders and known brands that specialize in funding alternative businesses. Cannabis lenders are out there, though many function only in a single state. Look for cannabis lenders in your area.


Line of Credit


When scoping for investment, don’t forget that you can get a line of credit instead of a loan. Some banks will open a business line of credit but are more picky about approving a loan application.


Expense-Specific Funding


Then there are businesses that have a laser-focus on what the money can be used for. Many of your non-cannabis-related business needs can be financially covered with loans and credit offered for specific purposes. You can fund a lot of your business costs through expense-specific methods.


Real Estate Loan Application


The real estate industry specializes in focusing on the property, and so do real estate lenders. If what you need funding for is to build, buy, or renovate a property, then real estate lenders are where to look. No need to get a cannabis business loan when you can get a loan for building upgrades.


Buy or Refinance a Property


If you’re looking to buy or refinance a property, or acquire raw land to develop, these are pure real estate transactions. This means you can get a loan designed specifically to buy or refinance from real estate lenders.


Renovation Loans


There are many lenders that offer loans designed for building renovations, both residential and commercial. So if your cannabis location needs some remodeling to be ready for business, or repairs after damage, then renovation loans are a good option.


Equipment Leasing


Need vehicles or business equipment? There are many services that will lease the equipment to you so that you don’t have to purchase it. These businesses don’t care what the equipment is used for, so the nature of your business never factors into leasing approval.


Vendor Tab


If you already have a good relationship with vendors, consider asking for a tab. If you need to ride over one financial rough-patch, asking for some invoice wiggle-room can be a good way to coast over budget concerns for businesses that are currently generating revenue.




Many startups look to investors as a primary source of opening funds. Investors provide money and expect returns as your business grows. There are two kinds of investor that are practical to seek for your cannabis business: venture capitalists and angel investors.


Venture Capitalists


Venture capitalists make a business out of investing in small businesses. They can be large firms or wealthy individuals. Like lenders, some venture capitalists will avoid involvement with cannabis and some specialize in cannabis business investments. So do your homework before pitching.


Angel Investors


Angel investors are individuals that bestow a significant investment to a business. They tend to be individuals or smaller organizations making a personal gesture in who they choose to invest in. Because angel investors are individuals, they often have more latitude in who they can choose to invest in.


Personal Loan



Like any business owner, you can choose to involve your personal finances to fund the company. Personal loans tend to be smaller with higher interest than business loans, but they are a way to get a loan when you’re having trouble with approval. A personal loan can be applied for through many lender types and you may be eligible for special rates or loans through organizations you are affiliated with. Lenders offering personal loans consider your income and credit score, but not the line of work you’re in. There is usually no need to specify what your personal loan is for.




Finally, there’s crowdfunding. There have been several cannabis brands that got all the startup capital they need through viral crowdfunding campaigns, but this is a very unique source of funding that doesn’t work for everyone. It can’t hurt to start a crowdfunding campaign and invite your network to take an interest. Sometimes, the winds are right and a crowdfunding campaign catches fire among internet communities. Sometimes, you get a large swell of funding from your cultivated network.


Be prepared, a crowdfunding campaign takes focus, work, and follow-through. When the campaign is over, be sure to send out your donor-rewards no matter how much you raise.


Find Other Funding After a Rejected Loan Application


If you’re looking for a cannabis business loan, don’t underestimate other routes for funding. There are many ways to fund your cannabis business, from cannabis-friendly lenders to purpose-built financing. Thus, try multiple forms of funding and don’t get discouraged if a business loan application is denied. Lenders and investors have their own limitations and motivations. For more information on funding for your cannabis business, contact us today!