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The short answer
A licensed operator can usually get working capital from private lenders, not banks. Costs run low for a secured line. They run high for daily-debit advances.
Size the gap first. Then compare total dollars repaid, not the headline rate.
On this page
- Fast working capital options, usually cheaper to costlier
- What the Federal Reserve survey shows
- Lines of credit vs term loans for dispensaries
- Same-day funding: what is real
- Revenue and time-in-business minimums
- True APR on daily-debit products
- Seasonal and payroll gaps
- A worked example: a three-store operator
- Questions to ask a lender
- Terms to know
- Frequently asked questions
Fast working capital options, usually cheaper to costlier
Cost depends on structure more than on the lender's name. Short terms and daily debits raise the cost per borrowed dollar.
This order is a general pattern, not a quote. Your file, state and collateral move every line.
| Option | How you repay | Cost pattern | Best use |
|---|---|---|---|
| Vendor terms | Pay on the invoice due date | No interest if you pay on time | Routine inventory |
| Secured line of credit | Interest on the drawn balance | Lowest of the lender-based options | Recurring gaps |
| Short-term term loan | Fixed monthly or weekly payments | Moderate, fees add up | One-time need |
| Revenue-based financing | Share of daily or weekly sales | Higher, tied to a factor rate | Fast growth spurts |
| Merchant cash advance | Fixed daily debits | Highest effective APR | Emergencies only |
Cash Gap Sizer
Estimate how much working capital your inventory cycle really ties up.
How to use this: Enter your own numbers. The tool compares days stock sits against vendor terms and adds a payroll buffer. Nothing is stored.
What the Federal Reserve survey shows
The Federal Reserve Banks run an annual Small Business Credit Survey. The 2026 report covers 6,525 firms surveyed in late 2025.
Thirty-eight percent of firms applied for a loan, line of credit or merchant cash advance. Online lenders' share of applicants rose from 17% in 2020 to 29% in 2025.
Sixty percent of online-lender borrowers said actual costs ran higher than expected. Small-bank applicants were fully approved 57 percent of the time.
Lines of credit vs term loans for dispensaries
When a line fits
A line works when the need repeats. Inventory swings, payroll timing and tax payments all come back every month.
You draw what you need and repay as sales come in. Interest runs only on the balance.
When a term loan fits
A term loan fits a single purchase with a clear payoff. Think of a buildout phase or a one-time bulk buy.
The payment is fixed. The risk is paying interest on money you no longer need.
Same-day funding: what is real
Treat same-day as a claim to test. Ask what separates a decision from cash in your account.
Cannabis files add steps. The lender checks your license, your ownership and your bank or processor activity.
Decision
A soft review of statements and license status.
Compliance check
Ownership, license and source-of-funds review.
Documents
Signed agreement, UCC filing and any guarantees.
Funding
Wire or ACH once every step clears.
Ask one question before you sign. How long did approval to funding take on their last ten deals?
Revenue and time-in-business minimums
Each lender sets its own floors. Ask for them in writing before you spend time on an application.
| What lenders look at | Why it matters | What to prepare |
|---|---|---|
| Time with an active license | Shows operating history | License certificate and renewal records |
| Monthly revenue | Sets the payment they can trust | Twelve months of statements |
| Bank or processor deposits | Confirms real cash flow | Statements that match your tax returns |
| Credit of the owners | Signals repayment habits | Personal credit report and explanations |
| Collateral | Lowers the lender's loss risk | Inventory list, equipment list, property papers |
A thin file does not end the search. It narrows it to products with higher cost or lower limits.
True APR on daily-debit products
Advances quote a factor rate, not an APR. A factor of 1.35 on a short term can hide a very high APR.
Daily debits shrink your balance fast. That makes the real annual rate higher than a simple calculation shows.
Our revenue-based financing guide includes a converter that does the declining-balance math.
Seasonal and payroll gaps
Cannabis sales swing around holidays, events and local supply. Payroll does not swing with them.
- Keep a standby line open before the slow season, not during it.
- Draw for payroll only when a dated sales event will repay it.
- Set a rule: repay the line first when receipts spike.
- Track the draw balance weekly, not monthly.
A line you never need costs little. A line you need and cannot get costs a lot.
A worked example: a three-store operator
These numbers are an illustration. They show how the sizer above works, not what any lender will offer.
An operator buys $120,000 of product a month. Stock sits 45 days. Vendors want payment in 15.
That 30 day gap ties up $120,000. Payroll is $60,000 a month and the owner wants four weeks covered. That adds $56,000.
The operator holds $40,000 in cash. The funding need is $136,000.
Carry that for three months at 24 percent APR. The interest is $8,160. Compare that number against any advance quote.
| Step | Calculation | Result |
|---|---|---|
| Inventory cash tied up | $120,000 x (45 - 15) / 30 | $120,000 |
| Payroll buffer | $60,000 x 28 / 30 | $56,000 |
| Less cash on hand | $40,000 | - $40,000 |
| Funding need | Sum of the above | $136,000 |
| Interest, 3 months at 24% | $136,000 x 24% x 3 / 12 | $8,160 |
Questions to ask a lender
- What is the total cost for my expected draw period?
- What fees apply to draws, unused limit and renewal?
- What collateral and guarantees do you require?
- How long did approval to funding take on your last ten deals?
See our guides to draw periods and fees and line of credit collateral.
Terms to know
| Term | Plain meaning |
|---|---|
| Draw period | The window when you can borrow from the line. |
| Covenant | A promise you make to keep certain numbers or habits. |
| Personal guarantee | Your own promise to repay if the business cannot. |
| UCC lien | A public notice of the lender's claim on your assets. |
| Unused-line fee | A charge on the part of the limit you do not draw. |
| Factor rate | A multiplier that sets the total payback on an advance. |
Frequently Asked Questions
Sources and further reading
- FinCEN guidance FIN-2014-G001, Marijuana Businesses
- Federal Reserve, Small Business Credit Survey
- CFPB, Small Business Lending Rule FAQs
- Federal Reserve Banks, 2026 Report on Employer Firms (2025 Small Business Credit Survey)