Representative example: Leslie gets financing for her cannabis business
Leslie wants to start growing cannabis in bulk on her farm to sell to distributors and dispensaries. Besides buying a lot of seeds and growing equipment, she also needs to pay for renovations, lights, a security system worth at least $5,000.00 as per federal standards, licensing fees, staffing, administrative costs, increased electricity and hydro bills, and other expenses incurred during the first year before she starts bringing in revenue.
Leslie used to own a second home, which she sold to make up most of the money needed to cover startup costs, but she is still short about $150,000.00.
Leslie finds an online lender that offers loans for cannabis businesses and submits an application. With a strong credit rating of 820 and a good amount of equity built up in her farm, she is approved for a 4-year loan with a competitive APR. The lender only requires that 13% of the loan plus interest be paid back during the first year while Leslie grows the business, after which she has to pay back 29% of the loan plus interest each year.
|Startup costs + first year operating expenses||$750,000.00|
|Loan type||Term loan|
|Interest rate (APR)||9.90%|
|Loan term||4 years|
|Additional fees||Origination fee of 3.50% ($5,250.00)|
|Monthly payment (year 1)||$1,713.45|
|Monthly payment (years 2, 3 & 4)||$4,204.74|
|Total loan cost||$171,932.04|
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.