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Cannabis Equipment Loans: The Essential Guide

Marijuana is a booming growth industry, with many states now offering legal cannabis, whether medical only or medical and recreational. The new business opportunities have attracted many corporations and small business entrepreneurs to invest significantly in the industry, in what some call the “green rush.”

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However, the lingering vestiges of federal prohibition and social stigma threaten to hamper the industry’s growth. One area in which the laws negatively impact business owners is financing.

Most lenders are still hesitant to lend to the burgeoning industry. This is especially challenging when getting the expensive equipment often necessary for cannabis production, shipping, and sale.

Fortunately, some lenders and marketplaces recognize the funding needs of legal marijuana businesses and are willing to step up and provide financing. This article covers what you must know about how cannabis equipment financing works.

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    What is Cannabis Equipment Financing?

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    Many cannabis companies require expensive specialty equipment to develop and deliver quality products to their customers. But businesses don’t have the capital on hand to purchase equipment upfront.

    Equipment financing helps solve this catch-22 by letting cannabis businesses acquire needed equipment on credit. Financing options include equipment loans and leases.

    However, the marijuana industry faces the unique challenge of limited lending options due to the legal nature and perceived risk of the industry. Companies involved in legal recreational or medical marijuana must put in some additional work to find lenders that work with them.

    Why is business financing challenging for the Cannabis Industry?

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    Despite most Americans supporting legalization, marijuana remains illegal on the federal level. It’s still a Schedule 1 narcotic, listed in the same category as heroin.

    Because of the continued federal prohibition, many banks and lenders won’t do business with the marijuana industry. Most cannabis dispensaries can’t even open business bank accounts and are cash-only, although a few have started using cryptocurrency.

    Most lenders require business bank account statements and other paper trails to verify a business. It also gives lenders more avenues to pursue compensation in the case of a default.

    Traditional lenders like banks and credit unions typically won’t offer funding to cannabis companies. Most alternative lenders also don’t lend to risky industries like marijuana, gambling, adult entertainment, or firearm businesses.

    However, some lenders and marketplaces like UCS recognize this growing industry’s unique business opportunity and funding challenges. Much like you, these financial services companies are willing to bet that the industry’s future can outlast perceived risks.

    How does Cannabis Equipment Financing work?

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    Equipment loan features include:

    • Amounts: Up to $5 million per piece of equipment.
    • Factor rates: Starting at 3.5%.
    • Terms: 1-10 years.
    • Funding time: 3-10 business days.

    Equipment financing can provide up to $5 million for new or used equipment. The asset is the collateral for the loan. This is called a self-collateralized loan. You might be familiar with other self-collateralized loans like auto loans or mortgages.

    The process usually starts with getting an invoice from an equipment vendor. You then apply for the loan using the invoice.

    The lender pays the equipment vendor directly, sometimes for up to 100% of the value, meaning you don’t have to make a down payment. The vendor then delivers and installs the equipment so you can use it immediately.

    You’ll make fixed monthly payments until it’s paid in full. The lender holds a lien on the title to the equipment. Once you make the last payment, the lender releases the lien, and you own it outright.

    What are the qualifications for Cannabis Equipment Loans?

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    Most approved cannabis business owners meet the following minimums:

    • Annual revenue: $250k.
    • Credit score: 600.
    • Time in business: 1 year+.

    What are the advantages of Cannabis Equipment Financing?

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    The primary advantage is that you can acquire expensive cannabis equipment without putting out a ton of capital. Whether you don’t have the liquid funds to pay for the equipment or don’t want to risk depleting your cash reserves, financing lets you get the equipment you need now and pay over time.

    You also get a convenient online application with an easy approval process. Once approved, the funds get disbursed quickly so you can start using the equipment.

    It’s possible to get equipment financing with a less-than-perfect credit score. The recommended minimum is 600.

    The equipment is used as collateral, meaning you won’t have to add additional assets. You could potentially borrow 100% of the asset’s market value, meaning no down payment.

    What are the disadvantages of Cannabis Equipment Financing?

    The most significant concern with equipment financing is if it becomes obsolete before the loan is paid in full. In an ideal scenario, the equipment would last well after the loan is paid off, increasing its lifetime value to your business. If it becomes obsolete, the equipment is worthless when the loan is repaid.

    Another issue with equipment loans is that you’re responsible for maintenance. Although sometimes, you can get a warranty to replace the equipment if it malfunctions outside normal wear and tear.

    All loans cost money in terms of fees and interest. While equipment financing lets you acquire what you need on credit, you’ll wind up paying more for it than if you purchased it outright.

    A challenge specific to the cannabis companies also includes difficulty finding equipment lenders. While you still have options, they’re more limited due to the perceived risk of the industry.

    Pros & Cons

    pros, and, cons


    • Lets you purchase cannabis equipment on credit.
    • Easy application & approval process.
    • Loan funds get disbursed quickly.
    • Doesn’t require a perfect credit score.
    • The equipment serves as collateral.
    • Possible to finance 100% of the market value.


    • The equipment could become obsolete before paying off the loan.
    • You’re responsible for maintenance and repairs.
    • Loans cost more because of interest and fees.
    • Cannabis companies have more limited lender options.

    How do I apply for a Cannabis Equipment Loan?

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    The business equipment loan application process is fast. You can apply directly through our one-page application in a matter of minutes or contact one of our loan experts to guide you through the process.

    Step 1: Ensure the equipment is the right purchase for your business.

    You want to make sure the equipment you’re financing is worth the cost of the loan. As you repay the loan, you will build equity in the equipment. You want to ensure the equipment is built to last or will at least have resale value at the end of the loan. Also, as you build equity, you can use that for future business loans.

    Some things to consider include:

    • Will the equipment still be useful when the loan is paid in full?
    • What are the anticipated maintenance costs?
    • Can your cash flow support monthly payments?
    • Is the interest rate competitive with other lenders?

    Step 2: Gather your documentation.

    When applying for cannabis equipment financing, you need to provide the following:

    • Driver’s license.
    • The invoice for the cannabis equipment.
    • Voided check.
    • Bank statements from the past three months.
    • Financial statements.

    Step 3: Complete the application.

    Go to our application page or give us a call for more information.

    Step 4: Speak to a Representative.

    After we receive your application, a senior account executive will contact you. The account executive will discuss your business needs and focus on the cannabis equipment financing options and fixed-term business loan offers. We offer complete transparency. There are no hidden fees or surprises.

    You’ll get a complete breakdown of loan amounts, terms, interest rates, and fees. Once you have all the information, you can decide about your commercial truck loan.

    Step 5: Get Approved.

    Your equipment loan goes through when your application meets underwriting requirements and gets credit approval. Next, your money goes directly to your account. We can help you set up automatic payments, or you can arrange to pay by check or electronic payment.

    Frequently Asked Questions

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    Here are the most common questions about cannabis equipment financing.

    What types of Cannabis Equipment can I finance?

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    Cannabis growers, cultivators, dispensaries, and ancillary businesses that support the industry often require a wide range of equipment. Fortunately, it should be possible to finance most new and used equipment if there is a business need for it.

    Here are a few examples of what you can finance:

    • Display equipment.
    • Temperature-controlled storage.
    • Computers, computer accessories, and office furniture.
    • Closed-loop extraction system.
    • Rosin press.
    • Trichome separators.
    • Cultivation equipment.
    • Harvesting equipment.
    • Packaging, labeling, & shipping equipment.
    • Armored trucks.
    • Hydroponic systems.
    • Heat lamps.
    • And more.

    Is it better to finance or lease Cannabis Equipment?

    scale, question, importance, cannabis equipment leasing

    There are benefits and drawbacks to both equipment leases and loans. Choosing the right one largely depends on your business needs and the equipment.

    Cannabis Equipment Leasing

    Leasing equipment gives you a little more flexibility. You can typically get approved with lower credit and have a lower monthly payment. Replacing existing equipment at the end of the lease term is easier. In most cases, the leasing company covers repairs and replacement.

    However, you do not own the equipment as you’re essentially renting it for a prolonged period. Many leasing companies limit how you can use the equipment to protect their asset for resale. This option is better if you’re expecting a short lifetime of use.

    Cannabis Equipment Loans

    With equipment financing loans, you own the equipment. You can resell it or continue using it at the term’s end. The only real downsides are that you’re responsible for maintenance, and the equipment could become obsolete. However, if you’re confident the equipment will have an extended lifetime use, you’ll get the most for your money with an equipment loan.

    Do banks offer Cannabis Equipment loans?

    finance, facade, reflection

    It would be very challenging to find a bank that will finance cannabis equipment. Some local banks in legal states might consider it, but most national commercial banks won’t finance any aspect of the cannabis industry.

    Cannabis Equipment Loans – Final Thoughts

    plant, hemp, cannabis

    One of the challenges for small business entrepreneurs looking to get involved in the cannabis industry is competing with large corporations. These commercial enterprises often have the available capital to fund an equipment purchase without financing.

    With lenders refusing to finance the industry, many aspiring cannabis entrepreneurs are stuck between a rock and a hard place. Fortunately, some lenders are willing and able to be funding partners to help fuel your cannabis business ownership dreams.

    By financing equipment, you’ll have the resources necessary to develop and deliver your products. That gives you the time and freedom to focus on branding, marketing, and putting the best possible product on the market so that you can compete with canna-businesses, big or small.

    Contact us today if you have more questions or want to apply for a cannabis equipment loan. Our loan executives can help you find the best funding program for your business needs.

    We will help you grow your small business.

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        At UCS, we understand the value of your time and want to ensure that your application has a great chance of approval. Please take note of the following details before applying:
        • To be eligible, it’s necessary to have a business bank account with a well-established U.S. bank such as Chase, Wells Fargo, Bank of America, Citibank, or other major banks. Unfortunately, online-based bank accounts like PayPal, Chime, CashApp, etc., are not permitted.
        • When describing your current average monthly sales deposits to your business bank account, please provide accurate information. Our approval process is based on your current business performance, and it’s essential to provide accurate details about your current sales in the first question on the application form. We cannot approve applications based on projected revenues after receiving funding.
        We appreciate your understanding and cooperation in ensuring a smooth and successful application process.
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