Cannabis Business Loan Program
Colorado is one of the first states in the country to offer business loans to the cannabis industry, with the administration of Governor Jared Polis instituting the program in order to give an opportunity for social-equity licensed cannabis businesses to receive lending capital to build and improve their current business operations.
The program offers loans ranging between $50,000 and $150,000 that qualified individual business owners can utilize to make renovations, purchase equipment, expand their operations, and much more. An initial $1 million was earmarked for the program, which will be treated as a revolving loan fund, with interest generated being put back into it; with that being the case, the program is anticipated to grow in funding to over $2.9 million over the course of the next 10 years.
According to Governor Polis, the Cannabis Business Loan program is expected to increase employment opportunities throughout the state, as well as provide a means for otherwise disadvantaged people to get their foot in the door of the growing cannabis industry.
The program will create and retain 239 good-paying jobs and promote equity in the cannabis industry by providing growing businesses access to funding,” Polis said. “I am committed to saving small businesses money and ensuring our state remains a great place to start and run a business in every industry.”
The main driving force for the creation of the program, Polis noted, is the fact that while the majority of the states in the nation have legalized marijuana to varying degrees, getting involved in the business aspect of it can be difficult due to the fact that a lack of federal legalization impacts the ability to acquire loans in some cases. Basically, some lenders simply do not want to be associated with the cannabis industry.
To qualify for a Cannabis Business Loan in Colorado, there are certain requirements that an applicant must be able to meet; primarily, they must own what would be considered a social equity licensed cannabis business and possess a regulated business license from the state’s Marijuana Enforcement Division. Full details on qualifications will be provided further into this document.
While the Cannabis Business Loan program primarily is meant to be used by larger businesses, smaller startups have access to financial resources provided by the state as well, such as the Cannabis Business Grant.
The lending capital for the Cannabis Business Loan program is managed by NuProject – an organization that provides capital, coaching and connections for socially and economically disadvantaged entrepreneurs – which has partnered with the state to provide loans that would normally not be made available to cannabis-related businesses from traditional lenders.
The Cannabis Business Loan program provides low-interest, revolving funds, which will enable the initiative to support more and more cannabis businesses in the future as the loans are repaid with interest over time.
Loans provided by the program will have favorable and manageable terms based on the needs of the borrower; Colorado state representatives noted that NuProject was the perfect organization to manage the loan fund due to their long-time financial experience within the cannabis industry. Their unique perspective will ensure the qualified individuals will have access to loans that they ordinarily would be excluded from due to a number of reasons, such as limited collateral or cash flow.
Again, loans for this program are solely for social equity licensed cannabis businesses, which can apply for amounts ranging between $50,000 and $150,000 to be distributed by NuProject. The full list of requirements that applicants must adhere to in order to qualify for a loan are as follows:
- The applicant must possess an active social equity license granted by the Colorado Marijuana Enforcement Division; in addition, they must be the majority owner of the business, possessing at least 51 percent or more
- The applicant must already own an operational cannabis business with a valid license to do so, and be able to show at least 18 months of revenue
- The applicant must have completed a verified technical assistance program, and agree to participate in technical assistance offered by NuProject
- And finally, the applicant must meet the lending requirements put forth by NuProject
Interest rates for cannabis business loans are capped at 6.25 percent, and can be utilized as working capital, location renovations, expansions, the purchase of new equipment, and numerous other uses that would benefit the business.
To find out more information and how to apply for a Cannabis Business Loan in the state of Colorado, please visit the new project website at https://nuproject.org.