Huntington Beach, CA: Business owners looking to obtain a business loan for equipment financing, inventory financing or working capital have many options to choose from. Capital is plentiful for companies on the rise and in need of financing to meet their growth potential. In fact, most of our clients come to us with equipment financing, purchase order financing, inventory financing, and working capital loan needs. Huntington Coast Capital has a extremely high success ratio in placing these loan requests.

However, there are a couple of situations where this may not be so easy. On a rare occasion we will get a funding request for a company in the medicinal marijuana industry. While the selling of marijuana is legal in some states, there is still a stigma attached to it, even if it is legitimately prescribed by a doctor. As you can imagine, obtaining funding for the growers and distributors in this industry, even if completely legitimate, is very difficult to secure. Some lenders simply do not lend in this industry and lump it together with other unsavory industries like gambling and adult content distribution. Is this fair? I have no idea. This article isn’t about providing an opinion on what the lender’s moral compass should be when analyzing loan requests in this industry. I can say, however, that finding a lender to fund your expansion in this business is very difficult. In fact, even with our extensive contacts in the industry, we only know of one. That’s right one. However, we were happy to have this contact when we received a call from a company in Colorado inquiring about an equipment loan along with funding for tenant improvements for his budding (no pun intended) business. The fact is that his cash flow and profit margins are extremely strong and his business could grow substantially with the right capital partner. Looks like we found them a solution after months of searching on their own in vain. A satisfying moment for us indeed. Now his Cannabis business is set to catapult to the next level!

The second difficult spot to be in is when you are looking for accounts receivable financing for consumer accounts receivable. The market is flooded with options for financing accounts receivable when you are selling business to business, but business to consumer is a ghost town. Most all lenders have the perspective that financing against these debt pools is risky and the credit process for business credit and personal credit is much more subjective and difficult to manage. I have to say, that I agree. To manage risk in this area requires having a specialty and sole dedication to the industry. Like other types of lending, you need to manage losses through diversifying the risk over several separate exposures and minimize credit to any one debt holder. However, this said, it is possible, just not popular among the lending community. As before, we have only one lender in this industry! We don’t come across these requests too often, but when we do, it is satisfying to say, “we may have a solution.”

Do you have a difficult loan request? Has everyone told you “no” because you fit one of the scenarios above? If so, we would like to speak with you!

Be on the lookout for our next blog article that features auto mechanics and why that experience also requires a knowledge of the options! I think we can all agree that we are paying too much for our cars to be serviced in most cases and it pays to know who else can do it for less!

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