Raising Cannabis Capital 0070: Weed Lending - Investor

"Cannabis Investor Spotlight" featuring Allan deAbreu CEO Weed Lending speaking to Dan Humiston about lending money to cannabis companies to help them expand.

Produced By Bulls Media

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Dan Humiston:
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Allan DeAbreu:
It doesn't matter that credit score keeping as long as you have the add that it will be able to cover that amount that you're requesting. So if you want a two hundred fifty thousand dollar as a base loan well you got nuts at the bank and is it your home and your car is the land you have investments in a building. You're making some type of other way that you're retrieving money. For one case you have some stock.

Dan Humiston:
From Buminit media it's the MJ bulls podcast a show about Raising Cannabis Capital.

Dan Humiston:
I'm Dan Humiston. And on today's show how this cannabis entrepreneur is connecting companies looking for asset based loans with lenders willing to loan money to cannabis businesses.

Dan Humiston:
Today the cannabis investor spotlight is shining on Alan DeAbreu. CEO of weed lending net Alan thanks for being on the MJBulls Podcast.

Allan DeAbreu:
Thank you for having me. Appreciate it very much.

Dan Humiston:
Well there's tons of capital flowing into the cannabis industry but most of it seems like it's coming in the form of investments. But up until recently it was nearly impossible for cannabis businesses to get loans.

Allan DeAbreu:
Why do you think that was relevant to the Federal Regulatory Commission of course setting up and say no FDIC. No the banks in our course our glorious government Uncle Sam. Wait a thought is lucky lot of people don't know that you can and have been able to get a asset base loan for a long time. It's just been loosening up slowly but slowly more and more every day.

Dan Humiston:
Yeah yeah. And you you sort of play that role where you find the cannabis companies that's looking for a loan and then you match them with the right loan company. Can you maybe elaborate a little bit more on exactly how you how you do that deal.

Allan DeAbreu:
What I deal with is asset based loans right now about a hundred different lenders in the asset base lending and that's what I deal with and the people. It doesn't matter the credit score. The key thing as long as you have the assets that will be able to cover that amount that you're requesting. So if you want a two hundred fifty thousand dollar as a base loan well you've got enough assets on hand is a zero or home. Is it's your car is it's the land you have investments in a building you're making some type of other way that you're retrieving money is enough for one case you have some stock. Those are all viable assets that my lenders would love. Yeah your credit score is secondary but it is also very important to better the credit score still a lower rate it's the same process as getting a car or a home. It's just a little bit more intricate. You need to have more documentation and being in this industry you're gonna have to make sure that you cover all the bases make sure your legitimate company but the E I N or I am based in the United States or SSN. But the key thing is to add that base loan is they want to see that you pay it back. They don't want to own your stuff. They don't know you can pay back the loan will be again a higher rate. Yeah. What the rate would be maybe anywhere from four point five. If you're lucky and as high as 20 percent I don't see to me and my aunt these lenders go past 10 percent. I don't do business with them. They're called Sharks.

Dan Humiston:
They're called loan sharks. Yeah you have 100 institutional lenders that would take whatever the asset is as collateral on the loan and then based on the type of business or the type of collateral that would help make the decision as to what the loan rate would be in the term. Is that how it works.

Allan DeAbreu:
Basically yeah. So if you are a grow operation or a dispensary startup then you're going to want to find or at least find a building as you want to purchase the building. You want to make sure that purchase of that building for that grow operation can offset and then some of the requests. How much the rate the spread the difference is it really depends. Each loan is different. Each scenario is different.

Dan Humiston:
Just know that as law paperwork I'm familiar with small business administration or SBA loans and I remember closing those in there were just mountains of paper mountains of paper. Yeah. Loans are complicated but a lot more complicated than somebody making an investment in your company. There's a lot of paperwork in all deals tying it all together.

Allan DeAbreu:
Now I do want to stress one key thing that makes this different than the DC books. The angel investors and the Shark Tank both as well as my lenders don't deal a pitch deck. They don't want a pitch deck. They want the actual numbers. Your projections your profit loss projections of the future as well. They want to know that you're going to be stable. They won't know they're going get paid.

Dan Humiston:
I want to take a minute to tell everyone about an exciting free opportunity that one of our former guests good harvest company is offering retail operators in cannabis brand managers in the adult use market. Good Harvest Company is preparing to launch a platform which uses customers buying and shopping behaviors to help brands effectively reach their customers. And for a limited time good harvest company will offer participating companies free access to their data in return for their feedback. To learn more. Good a good harvest.co.

Dan Humiston:
Talk to me about term length. Is that pretty much set.

Allan DeAbreu:
Well that's what he said. I mean the person trying to get a loan and that lender some people may need the short term equipment loan six months to a year and a half. Yeah that's very possible three years on equipment. Very possible. Residential real estate maybe depends if you have a lot of cash to put down. And that's the key thing that a lot of lenders are going to want to see that go to all of these skin in the game. It doesn't matter how much money you've already put in the past. They won't know how much money you're going to have to put it down to go forward with that. You come to him as a dreamer. They like to call it. I believe in dreams too. But realistically you still need money to get the lender motivated as well as those assets. So if you're going to try to buy real estate you're going to have 20 to 30 to 40 percent they're going to see having cash on hand that make them want to jump out of their pocket and start handing out money.

Dan Humiston:
Well it's a lot of information but like you said there's a lot of information needs to be put in it's a little bit different play than going for an investment from a venture capitalist. You have to approach it differently. I think that's an important takeaway from this conversation is you have to approach it a little bit differently. We will have all of Allen's information and all of weed lending Nat's information and the MJBulls Web site. So Allan thanks for being on the MJBulls Podcast this is an area that should be available to everybody loans in the cannabis industry. But it's nice to see that the loan money is starting to loosen up a little bit.

Allan DeAbreu:
But you know all I can say is that whether it be v.C. whether it be on my own and that these world either case or whether it be in the regular business world. Always do your checking on the people make sure they've been around find the right ones the nice they do your due diligence always do due diligence.

Dan Humiston:
Well that's good advice no matter what you're doing when it comes to taking on partners or taking an investment that's always good advice. Thanks Allan. It's good talking to you and good luck.

Allan DeAbreu:
All right thank you very much. So you have a great day down.

Dan Humiston:
You too. Let me take a second to think Trevett Hill for sponsoring today's show cannabis investors expect big returns from the companies that they invest in. Unfortunately not all cannabis investments succeed. Trevett Hill management team works with investors to help turnaround or in some cases purchased their underperforming portfolio companies to learn more go to Trevett Hill dot com.

Dan Humiston:
Thanks for listening to the MJBulls Podcast. To learn more about today's guest or to become a guest. Visit our website at MJBulls.com. Today's show was produced by Buminit media with original music composed by Jamie Humiston hemp Dan Humiston. You've been listening to the MJBulls Podcast.

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