All You Need To Know About Hemp Equipment Financing

Cannabis has proven to be a scientific revolution. With time, various states have legalized cannabis with a doctor’s prescription. In addition, hemp manufacturing businesses have also exploded. However, manufacturing, dispensing, and breeding these plants at a large scale require machinery that can cost you a fortune.

Given the promising future of this industry shortly, more and more entrepreneurs are looking toward this venture. As a result, a lot of financing options have surfaced as well since this equipment is expensive. This article brings you a clear insight into hemp equipment financing and how you can use it to your leverage.

What is hemp equipment financing?

Similar to any machinery financing, hemp equipment financing refers to a type of loan offered by private lenders, equity funds, etc. It eliminates upfront costs and allows businesses to purchase new equipment and improve productivity. Besides, you can receive up to 100% of the total amount and can leverage your equity with secured loans.

Unlike other loan options, hemp equipment financing schemes offer monthly payment terms and finance every part of the equipment including LED and HVAC products.

Why do you need hump equipment financing for your cannabis business?

Every business requires a large-scale setup. However, without the right machinery, it seems impossible. Similarly, the cannabis industry needs heavy machinery for wide-scale production. While the cost can leave a dent in your pocket, cannabis equipment financing can help a long way to bear the expenses. Here are some of the reasons why hump equipment loans are a great option for your cannabis business:

  1. Easy cash flow

Since the cost of machinery is very high, hemp equipment financing allows businesses to receive assets without investing a fortune. Instead, the loan scheme is distributed over a series of monthly installments or lease rentals, which makes it easy for entrepreneurs to go easy on their cash flow.

  1. Control

In hemp equipment financing, there is no need to lose the authority of your business. Besides keeping your assets, you have the authority over your business. However, in case there is a conflict or anyone fails to pay the monthly installments, in such cases, the business operations might be seized by the lender.

  1. Manage debt raising capacity

Compared to other loan options, equipment financing requires no extra assets. This is a great advantage since the balance sheet and other assets remain constant. Moreover, it ensures that your debt-raising capacity remains unaffected.

  1. Saving tax

Apart from being a heavy investment, purchasing your equipment might bring a lot of tax bills as well. However, with equipment finance and leasing options, there could be a lot of tax benefits involved. With financing or lease rents, these are tax-deductible and reduce the overall tax amount which is a great opportunity for businesses to save unnecessary costs.

How much money can you expect from hemp equipment financing?

Unlike other conventional loans, hemp equipment loans can be financed or leased at their full amount. An amount of around $100,000 to $3,000,000 can be expected for hemp equipment financing. However, if you are applying for a loan for a new business with zero revenue, you might have to add another asset as collateral. Besides, these loans are offered to people who have a good credit package, 35% down payment, etc.

What are the requirements to qualify for hemp equipment financing?

Wondering if you could jumpstart your business in the cannabis industry? Well, you are in for a treat. The regulations or rules may differ from various lenders. In addition, these loans are quick and take almost 24 hr to approve. You can seek financing based on personal and business credit scores of 650 or higher, industry sector, trade history, existing trade lines, debt coverage service ratio, etc.

While these financing options have paved the way for businesses in the cannabis industry to run their business smoothly.

However, here are some of the things that you need to jumpstart your business:

  • The required amount or the interest rate is decided by the value of the machinery, financial history, and credit scores.
  • If you do not have a good credit score, you can use this equipment as collateral and still get approved for the loan.
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