How to Acquire a Loan for Your Cannabis Venture – Judy Rinkus Founder and CEO of Seed to Sale Funding

It’s no secret that one of the biggest challenges facing cannabis operators is the lack of lending options. With banks unwilling or unable to get these entrepreneurs what they need to succeed, businesses are often left scratching their heads. 

Enter Seed to Sale Funding. The group of finance experts works with an expansive network to help canna-businesses secure the capital they need to start or grow their operations. With tens of millions of dollars in deal flow acquired since its launch three years ago, Seed to Sale Funding has quickly become a go-to resource for the booming cannabis industry.

Discover more about Seed to Sale Funding, the myriad ways they support clients, and what new entrepreneurs should know before entering the space in this exclusive Leafwire Q&A interview with Founder & CEO Judy Rinkus.

Leafwire:  What is your background? How did you get into the cannabis industry?

Judy Rinkus:  For most of my career, I was in commercial banking, employed by large, regulated banks. During my banking career, I primarily worked with privately-owned companies, reviewing and structuring their loan requests. I left that industry in 2016, and shortly thereafter, the voters here in Michigan approved recreational cannabis. I started being contacted by my former banking clients who wanted to get into this cannabis but were not able to get financing through banks. Through my financial industry contacts, I found 25+ private lenders located throughout the country who were interested in doing cannabis loans. I then pivoted from banking into starting my own consulting company, working with cannabis operators in placing these loans to these private lenders.

LW:  How has the reception from the industry been since founding Seed to Sale Funding?

JR:  We’ve been very successful, having placed around $70 million in transactions since launching in 2019. Most of the projects have been in Michigan because that’s where I’m located. But as I mentioned earlier, we can go into any state in the country. I currently have a pipeline of $80 million in transactions in 15 states that will probably close this year.

One of the things that I really enjoy about is working with both the entrepreneurs and the lenders, and the latter are very happy to have me involved as well. I speak “lender” – I know how the lenders view transactions. So when I send them opportunities, they’re already partially vetted, and the lender can make a fast decision.

LW:  What sets you apart from other cannabis financiers?

JR: There are a couple of reasons to do business with us. First, we have very high integrity. We are very transparent in terms of what can be done realistically for the clients we work with. I typically don’t bring on a client unless I’m certain that I can get something done for them.

Second is my expertise and my three team members. Between all of us, we have over 100 years of commercial lending experience. We’re able to bring all those years of experience to this really underserved industry. We are one of the very few consulting firms out there that can provide this level of service, professionalism, and expertise.

Third, and I believe this is the key differentiator:  We save the clients so much time, so much energy, and importantly, we double or triple their chance of getting an actual loan closed. For example, if a borrower were able to find a private lender directly, it is true that they might save our consulting fees. However, it’s not unusual to have the lender change its mind at the last minute, or maybe modify terms and conditions in a way that beyond that prevents the borrower from moving forward. In that case, they’ve wasted weeks and weeks of their time. At this point, they’re back to square one, and must find another lender. And these aren’t lenders that are household names – they’re called private lenders for a reason, they’re difficult to find. 

Contrast this to our process. With us, clients essentially apply once, and we can keep all their information in a secure data room. Then, if there’s a problem with the first lender we approach, we can just pivot to another one. Sometimes we restructure the request to make it fit into a lender’s box. This is an example of how our expertise is a huge benefit to our clients. So as you can see, the client has much better chance of getting a deal closed, at terms and conditions that work for them, as well as being able to close much faster.

LW:  Tell us about a memorable client success story?

JR:  There are a couple I love to share. The first story is about one of the first loans we closed in very early 2020. It was a $9.3 million transaction to build a sizable greenhouse cultivation facility in Michigan. Over the past 2 years, we’ve kept it touch with this client, and were thrilled when they started reporting some great financial results. Based on those results, we recently closed on a refinance of this deal at a much lower interest rate. We also able provided some additional funds for working capital. The lesson here is, it’s not a one and done with us, we build a relationship with our clients. As the lending options change out there in the market, we keep our clients informed, always trying to get them the best cost of capital that we can.

This next one is my all-time favorite story. The client came to us after it had already received a commitment from a construction lender (the client found this lender on their own). The lender reneged on the deal two days before closing, leaving the client in a huge predicament since they’d already made commitments for the use of the proceeds. Luckily, they contacted us immediately. We were able to restructure the entire package using two different loan products that basically got the whole deal done for them, providing all the funding they needed. We were able to close 10 days after they called us. 

This is a cautionary tale for people who are trying to work directly with a lender. Because that’s exactly what happened here. They ended up working with somebody who was probably not the best player out there. The original lender couldn’t close, leaving the entrepreneur hanging out to dry. Luckily, we came in and saved the day!

LW:  What advice do you have for entrepreneurs entering this space?

JR:  First of all, you should have experience in the cannabis industry. My lenders typically don’t like somebody who’s coming in with no knowledge of the industry and is trying to put together a team of employees who have expertise in the industry. So, the actual entrepreneurs themselves should have some cannabis experience. 

The entrepreneur should also have financial experience, and a broad range of other business experience. The other thing that you must keep in mind is that when we’re talking about debt capital, I almost never can provide 100% of the need to, say, build a large grow facility or other large capital project. There is going to have to be equity capital that comes in behind me. This usually means that there must be some financial resources on the part of the entrepreneur personally to meet that need. 

LW:  Do you foresee any major changes happening in the industry any time soon?

JR:  There are a lot of people thinking that maybe the SAFE Act may pass before the end of the year. Here’s the thing: that just means banks are allowed to make commercial loans to the cannabis industry. It doesn’t mean they’re going to do it.

There are a lot of other reasons why a bank may choose not to make commercial loans. And even if they do, they probably are going to pick a relatively small set of the array of different loans and lending products that already I have. So the SAFE Act will be a good thing for the cannabis industry in general but it may not change the lending and funding aspect of the industry as much as some people might think.

LW:  What else should Leafwire readers know about Seed to Sale Funding?

JR:  My team and I are passionate. We’re “deal people”. We like doing deals, and we like to get things closed. It’s a whole different attitude than somebody in a bureaucratic position. We operate very quickly, we respond to the market very quickly, and we have excellent customer service. On our website we publish a list of featured transactions, using the name of the client. We have clients who are willing to back up what we say. We can show that we close business with actual deals. 

The only other thing is our results really do speak for themselves. We have closed over $70 million in transactions in just about three years, which is a pretty big number! I really look forward to talking to any entrepreneurs out there, because I’d like to add them to our list of successful clients.

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