Growing a CBD brand can be challenging, and securing funding is an important aspect of your growth. Without proper funding, you can struggle to invest in growth strategies like expanding your product line, increasing your marketing efforts, and hiring additional talented individuals.
However, obtaining funding for your CBD brand can be more challenging compared to businesses operating in other industries. This is primarily due to the legal and regulatory complexities surrounding the cannabis industry. While the availability of funding options has increased over the years, there are still some hurdles to overcome.
Inventory financing has worked for many CBD brands and should be on your radar to consider.
What Is Inventory Financing For Your CBD Brand?
Inventory financing leverages the resources of a financing partner to pay for your CBD production. Funding can often be customized to address your business’s exact manufacturing, shipping, and sales timelines. Some providers require no payment on goods until the inventory sells. This works well with natural cash flow cycles.
The products produced typically act as the collateral for the financing, meaning that if the business reports an inability to repay the funding, the inventory can be sold to cover the debt.
Inventory financing is especially valuable to any CBD brand experiencing a significant delay between paying for inventory and receiving payment from future sales. It is also helpful for businesses that want to receive volume-based discounts by placing larger orders to support all of their sales channels. This works best when done on a quarterly or other regular basis and can help to prevent the stock-out issues that stifle growth.
Here are some inventory funding options for your CBD brand.
Inventory Financing Options For CBD Businesses
As a CBD brand, it’s crucial to assess your financing needs and consider suitable options to make informed financial decisions. Here are several options CBD brands can utilize to secure inventory financing:
Business Loans
Banks, credit unions, or online lenders can provide a traditional business loan. These loans typically require a solid business plan, good credit history, and collateral. Some lenders specialize in providing loans to businesses in the CBD industry.
Small Business Administration (SBA) Loans
The SBA offers various loan programs that can be suitable for CBD businesses. The most popular is the SBA 7(a) loan program, which provides funding for working capital, equipment purchases, or real estate. SBA loans often have favorable interest rates and longer repayment terms.
Crowdfunding
Crowdfunding platforms like Kickstarter or Indiegogo can help you raise funds from a large pool of individuals. You can offer rewards or pre-sales of your CBD products in exchange for funding. Ensure compliance with platform rules and regulations regarding CBD-related projects.
Private Investors
You may consider seeking investment from private individuals or angel investors who are interested in the CBD industry. Prepare a compelling business plan and pitch to attract potential investors who align with your business goals and values.
CBD-Specific Funding Programs
There are some organizations and financial institutions that specialize in providing funding solutions specifically tailored for CBD and cannabis businesses. These programs understand the unique challenges of the industry and offer customized financing options.
Remember to thoroughly research and evaluate each funding option to determine which aligns best with your business goals, financial situation, and risk tolerance. It’s also advisable to consult with a financial advisor or accountant who specializes in the CBD industry to navigate the specific legal and financial considerations related to CBD brands.
What Are The Benefits of Inventory Financing For CBD Brands?
Financing your inventory can offer several benefits that can support your business’s growth and overall success. Here are some key benefits of inventory financing for CBD brands:
Cash Flow Optimization
Inventory financing enables you to efficiently handle your cash flow. Rather than immobilizing a substantial portion of your working capital in CBD inventory, you can leverage financing to offset the expenses associated with inventory. This approach allows you to preserve more cash for diverse business requirements, including marketing initiatives, recruitment endeavors, or the expansion of your product line.
Product Expansion
By utilizing financing, you can seize opportunities to amplify your inventory and expand your product line. This flexibility empowers you to invest in new product lines, introduce variations of existing products, or augment their stock levels to effectively cater to the increasing customer demand. Such expansion endeavors have the potential to boost sales and captivate a broader customer base.
Competitive Advantage
Gaining access to inventory financing offers a significant advantage in the competitive landscape. It enables you to seize timely purchasing opportunities, secure high-demand inventory, and outpace your competitors. By ensuring optimal stock levels and expanding your product range, you can attract and retain customers, leading to increased sales and profitability.
When considering inventory financing options, it is crucial to conduct a thorough evaluation of your business requirements, associated costs, and repayment capacity. Comparing various options, terms, and interest rates will help you select the most appropriate financing solution that aligns with your growth aspirations and financial goals.
Inventory Financing With Kickfurther
For CBD companies, a growth funding option that provides larger amounts than traditional financing and at faster speeds is inventory funding with Kickfurther.
Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you control. Kickfurther’s unique funding platform can fund your entire order(s) each time you need more inventory, so you can put your capital on hand to work growing your business without adding debt or giving up equity.
Why Kickfurther?
No Immediate Repayments: You don’t pay back until your product sells and you control your repayment schedule.
Non-Dilutive: Kickfurther doesn’t take your equity.
Not Aa Debt: Kickfurther is not a loan, so it does not put debt on your books, which can sometimes further constrain your access to additional capital providers and diminish your valuation if you approach venture capital firms.
Quick Access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.
Interested in inventory funding through Kickfurther? See how much capital you can access by creating an account today at Kickfurther.com!
