Best cannabis business loans

If you’re involved in the cannabis industry in any shape or form, it’s likely you already know how difficult it can be to find a lender willing to work with you. Most banks don’t offer cannabis financing because it’s just too risky.

It’s still possible to find funding for a cannabis business, despite federal roadblocks, though you’ll generally need good credit. Count on needing a credit score above 670, though some lenders on our list accept scores lower than that.

We’ve narrowed down five of the best lenders that work with cannabis businesses — or budlenders if you will.

Compare financing options for your cannabis business

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Name	Product	Filter Values	Min. Amount	Max. Amount	APR	Requirements
ROK Financial business loans Finder Rating: 4.7 / 5: ★★★★★ ROK Financial business loans Finder Rating: 4.7 / 5: ★★★★★			$10,000	$5,000,000	Starting at 6%	Eligibility criteria 1+ year in business, $15,000+ in monthly gross sales or $180,000+ in annual sales	Apply for up to $5 million with a 15-second online application. Choose your best offer and get funded as soon as the same day.	Go to site More Info	Compare	loading Fetching your data...

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Best for customer service

Finance Factory business loans

Finder Rating: 4.1 / 5 ★★★★★

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Finance Factory is a loan connection service with great customer reviews and has earned recognition for customer satisfaction multiple times. It works with high-risk investments like cannabis and startups. Finance Factory offers personal loans, lines of credit, revenue-based loans and advances, and equipment financing. Rates range from 5.99% to 8.75%, terms range from 24 to 60 months and loan amounts are between $5,000 to $500,000. However, you’ll need a high personal credit score of at least 600 to qualify for the business express loan. For non-startup financing, you need a credit score of at least 680.

• Pros and cons

  Pros

  • Accepts cannabis businesses
  • Programs for startups
  • Quick online application form
  • Low maximum rates
  • 3 customer satisfaction awards
  • Accredited by BBB with A+ rating

  Cons

  • Good credit required
  • Long turnaround time

• More details

  Loan amount	$5,000 – $500,000
  APR	5.99% to 8.75%
  Min. Credit Score	600
  Loan term	2 and 5 years
  Requirements	Good to excellent personal credit, steady cash flow, two years in business

Loan amount	$5,000 – $500,000
APR	5.99% to 8.75%
Min. Credit Score	600

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Best for bad credit

First Down Funding business loans

Finder Rating: 4.6 / 5 ★★★★★

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First Down Funding is an alternative business loan provider that offers fee-based financing with a low minimum credit score of 400. Its rates are lower than what you'll find with most alternative lenders. But it's not ideal for starting a cannabis business. It requires at least $300,000 in annual revenue, and your business must be established for at least two years to qualify for a loan.

• Pros and cons

  Pros

  • Accepts credit scores as low as 400
  • Low cost compared to similar alternatives
  • No personal guarantee required

  Cons

  • High annual revenue requirement
  • Must be established for at least two years

• More details

  Loan amount	$5,000 – $300,000
  APR	Fee Based
  Min. Credit Score	400
  Loan term	12 to 120 months
  Requirements	At least 2 years in business, an annual revenue of $300,000+, and a minimum credit score of 400

Loan amount	$5,000 – $300,000
APR	Fee Based
Min. Credit Score	400

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Best term loan

Diamond business loans

Finder Rating: 3.85 / 5 ★★★★★

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This California-based lender specializes in working with businesses that have struggled to find funding elsewhere — and it has a special program specifically for cannabis companies. Its rates are competitive compared to other cannabis business loans, starting at just 5.9%. The application is mainly based on your financial history, so look elsewhere if you have fair or bad credit.

• Pros and cons

  Pros

  • Rates based on personal finances
  • Low starting APR of 5.9%
  • Assistance with application

  Cons

  • No online application
  • Turnaround of a few weeks

• More details

  Loan amount	$25,000 – $150,000
  APR	5.9% to 19.99%
  Min. Credit Score	680
  Loan term	12 to 60 months
  Requirements	680+ personal credit score, no late payments or bankruptcies

Loan amount	$25,000 – $150,000
APR	5.9% to 19.99%
Min. Credit Score	680

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Best for new businesses

United Capital Source business term loans

Finder Rating: 4.8 / 5 ★★★★★

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United Capital Source is an alternative lender that offers a wide range of financing to businesses in high-risk industries, including the cannabis industry. It requires little documentation, and you might be able to qualify for a loan even if you have bad credit. However, you'll likely need to provide bank statements, so you might not get approved if you're unbanked.

• Pros and cons

  Pros

  • Transparent about costs
  • Rates start at low 5%
  • Only requires six months in business

  Cons

  • Usually requires bank statements
  • Can be expensive with bad credit
  • Some products have daily or weekly repayments

• More details

  Loan amount	$10,000 – $5,000,000
  APR	Starting from 5%
  Min. Credit Score	550
  Loan term	36 to 120 months
  Requirements	6+ months in business, $75,000+ annual revenue, 550+ credit score

Loan amount	$10,000 – $5,000,000
APR	Starting from 5%
Min. Credit Score	550

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Best connection service

Green Leaf Money cannabis business loans

Finder Rating: 4.2 / 5 ★★★★★

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This service can help your business connect with a bank or lender that's willing to work with cannabis companies. Its partners offer relatively low rates on working capital loans, though you need good credit to qualify. But you'll have to reach out for more info — there's very little available on Green Leaf Money's website.

• Pros and cons

  Pros

  • Compare multiple types of financing
  • Specializes in cannabis
  • Responsive customer service

  Cons

  • Not transparency about costs
  • Doesn't disclose partners

• More details

  Loan amount	$1,000 – $250,000
  APR	6.98% to 30%
  Min. Credit Score	700
  Loan term	12 to 144 months
  Requirements	Documented income, records of your business spending and accounts

Loan amount	$1,000 – $250,000
APR	6.98% to 30%
Min. Credit Score	700

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How we picked these lenders

We picked these lenders based on cost, availability and the ability to fund most types of cannabis businesses. We also looked for lenders that made a point they could accommodate high-risk businesses and startups, either with special programs or loans specifically for cannabis business. We also considered customer reviews, reputation and Better Business Bureau (BBB) accreditation and ratings.

Since no one loan is best for every business, we made sure to include lenders that offered different types of funding to fit a variety of business needs.

What changed in 2022?

We added Finance Factory to our list of best cannabis loans, due to its high customer ratings and willingness to work with high-risk businesses and startups.

How to qualify for a cannabis business loan

Business financing is different when it comes to the cannabis industry. Since many cannabis businesses don’t have financial business records, your eligibility often heavily depends on your personal financial history.

Here’s what you may need to qualify:

• Good personal credit. Generally, you’ll need a credit score of 670 or higher to qualify for a good deal on a cannabis business loan.
• Long credit history. The length of your credit history can also affect your application. Typically, you’ll need at least three years.
• No bankruptcies. You usually can’t have bankruptcies or other negative marks like tax liens or foreclosures on your credit report.
• Business bank account. While not always required, you often need to have a bank account for your cannabis business.
• Minimum time in business. Lenders typically require you to be up and running for at least six months to a year, with a few requiring at least two years.
• Legal status. Generally, all business owners need to be US citizens or permanent residents to qualify.

Types of cannabis business loans

There are several types of loans that you can use to fund your cannabis business. Which one is right for you depends on what you need financing for.

• Equipment financing is a lease or loan specifically to buy equipment for cultivating, processing and other uses.
• Working capital loans cover overhead costs like payroll and inventory when your business doesn’t have enough regular revenue.
• Merchant cash advances give dispensaries and other consumer-facing businesses an advance on future sales, which you repay plus a fixed fee.
• Invoice factoring allows growers and other business-facing companies to sell unpaid invoices at a discount to factoring companies. These usually come with a fee based on how long it takes for your clients to fill their invoices.
• Purchase order financing fronts you money to fill orders from customers. Like with factoring, you repay it plus a fee when your customers pay for the order.
• Commercial real estate loans offer financing to buy land, warehouses and other physical locations you need to operate your cannabis business.

Regulations around cannabis business loans

Cannabis is still federally illegal, so banks that offer loans to the cannabis industry could be subject to prosecution. They could also be liable if they lend to a business that breaks state law by selling to a minor or transports cannabis across state lines. These risks make it impossible for you to get a business loan from an FDIC-insured bank and hard to find funding from non-insured banks or lenders.

Additionally, cannabis businesses currently are ineligible for loans backed by the Small Business Administration, or SBA loans. That’s because the SBA doesn’t offer loans to businesses that engage in illegal activity. Unless the SBA makes an exception, these low-cost loans are off the table for the cannabis industry until cannabis is legalized at the federal level.

What about CBD business loans?

CBD businesses may fall into a legal gray area — but unlike cannabis, CBD use is legal in all 50 states. So getting funding for one is easier than for a cannabis business, especially in states where recreational cannabis has been legalized.

A cannabis lender could help, as there is overlap between the two types of businesses.

What are some alternatives to cannabis business loans?

If you plan on starting a cannabis business and don’t qualify with an online lender, there are other creative ways to seek out funding:

• Crowdfunding. The US Securities and Exchange Commission (SEC) allows anyone to invest up to $2,200 in small companies in exchange for a stake in the business. Companies can raise up to $1.07 million this way — and one way to do it all in one place is through crowdfunding.
• Business lines of credit. Alternative financing companies also offer lines of credit to help cannabis businesses cover ongoing expenses, though it’s often more expensive than a loan.
• Real estate loans. You can use these loans to buy or refinance the buildings or raw land you need to run your business.
• Angel investors. Similar to venture capitalists, angel investors help businesses get started and typically deal with smaller amounts of money.
• Personal loans. Got a solid credit history? You might have better luck getting approved for a personal loan. But make sure your lender allows you to put the funds toward a cannabis business.
• Home equity loans. Homeowners can also borrow against the value of their houses with a home equity loan or line of credit. You’ll also need to make sure your use is legitimate though.
• Private equity funding. Some private equity firms may be willing to offer short-term, high-interest loans or funding for a large stake in your company.
• Venture capitalists. In nearly all industries, you’ll find wealthy investors interested in helping small businesses grow, often in exchange for equity.
• Friend and family loans. Your friends and family can also invest in your business by personally lending you the funds and collecting on interest. Bring on a lawyer to help you write a legally binding contract to hold everyone accountable.

Cannabis business grants

Some states offer grants to help get a cannabis business started. Depending on your home state, you may qualify for one.

For example, California has the Cannabis Equity Grants Program. Its purpose is to aid local businesses in acquiring licensees and as a way to regulate cannabis in a way that “reduces barriers to entry into the legal, regulated market,” stated on CA.gov. This program offers assistance with regulatory compliance and securing the capital necessary to start the business.

Bottom line

If you have good credit, cannabis business loans can be an affordable financing option if you’d rather retain full ownership of your business. But since it’s such a high risk for lenders, you’ll likely pay higher rates and fees than other industries.

For funding that’s more affordable with fewer requirements, check out our guide to investor crowdfunding for cannabis businesses.