Alternative Finance Network Arranges $10 Million Revolving Credit Facility For Tilt Holdings

DENVER, Aug. 2, 2021 /PRNewswire/ — Alternative Finance Network (AFN), an independent financing network serving cannabis and hemp companies in the United States and Canada, announced today that it has arranged a $10 million revolving credit facility for Jupiter Research, LLC (“Jupiter”), a subsidiary of TILT Holdings Inc. (“TILT”) (OTCQX: TLLTF; CSE: TILT).

TILT now has access to low rates for cannabis financing at prime plus 3.5 percent and this facility is secured with accounts receivable, inventory, and related property from Jupiter. With this credit facility, TILT is leading the way for the cannabis industry to start receiving rates that are more in line with what non-cannabis commercial businesses experience. The proceeds will be used for general corporate purposes and capital projects. The line has a two-year term and will continue for additional one-year terms unless ended by either party.

“Alternative Finance Network completes cannabis financing deal for TILT Holdings Inc.”

“This transaction demonstrates our ability to assist leading cannabis companies in their search for working capital by using our network of cannabis-friendly funding sources to bring together borrowers and lenders,” said Scott Jordan, founder of Colorado-based Alternative Finance Network. “Without this expansive network, it would have been difficult for this transaction to have occurred.”

“TAFN has been a knowledgable and trusted partner in this process, and we were grateful to work with them on this credit facility,” said Gary Santo, CEO of TILT. “This transaction had its challenges given the nature of our industry, but TAFN’s perseverance and tenacity led us to a successful outcome. We look forward to the opportunity to work with them again in the future.”

About The Alternative Finance Network

The Alternative Finance Network (AFN), was created by Scott Jordan in 2019 with the mission of leveling the playing field and providing multiple funding options to cannabis business owners at the lowest possible rates using a network of financing partners to help its clients obtain the debt capital they need to expand their businesses and meet their corporate growth objectives. AFN provides access to banks, credit unions, life insurance companies, and private lenders who want to provide debt capital to cannabis businesses seeking financing for real estate, sale-leasebacks, equipment financing, and working capital lines of credit. AFN founder, Scott Jordan, has a long history in the cannabis financing space and has participated in over 100 financing transactions providing over $80 million in debt capital to cannabis business owners, and is currently working with some of the largest MSOs in cannabis. For more information, visit alternativefinancenetwork.com.

About TILT

TILT helps cannabis businesses build brands. Through a portfolio of companies providing technology, hardware, cultivation, and production, TILT services brands and cannabis retailers across 36 states in the U.S., as well as Canada, Israel, Mexico, South America, and the European Union. TILT’s core businesses include Jupiter Research LLC, a wholly-owned subsidiary and leader in the vaporization segment focused on hardware design, research, development, and manufacturing; and cannabis operations, Commonwealth Alternative Care, Inc. in Massachusetts, Standard Farms LLC in Pennsylvania, and Standard Farms Ohio, LLC in Ohio. TILT is headquartered in Phoenix, Arizona. For more information, visit www.tiltholdings.com.

 

Related Link:

https://www.tiltholdings.com/

Alternative Finance Network Announces $3.15M Sale-Leaseback For Stem Holdings, INC

Denver, CO — June 17, 2021 — Alternative Finance Network (AFN), a leading provider of financing for the cannabis industry led by the Marijuana Money Man, Scott Jordan, announces that it has facilitated a $3.15 million sale-leaseback transaction for an Oregon cultivation property owned by Stem Holdings, Inc. (CSE: STEM and OTCQX: STMH).

Stem Holdings, Inc. is a multi-state, vertically integrated, cannabis company that purchases, improves, leases, operates and invests in properties for use in the production, distribution, and sales of cannabis and cannabis-infused products licensed under the laws of the states of Oregon, Nevada, California, and Oklahoma.

“This transaction demonstrates our ability to assist leading cannabis companies in their search for working capital by using our network to bring together buyers and sellers,” said AFN founder, Scott Jordan. “We look forward to continuing our financing relationship with Driven by Stem as their growth accelerates and to continuing to level the playing field for all cannabis businesses for equal access to capital.”

The sale-leaseback transaction will help finance Stem’s objective of becoming “the first multi-state integrated farm-to-home cultivation and technology omnichannel cannabis company.”

Stem CEO, Adam Berk, commented, “Alternative Finance Network was great to work with. Their deal tenacity and bringing the correct partner to the table was key to getting this transaction to the finish line. We look forward to working with them on future financings”.

The transaction was assisted by John Thompson, Managing Partner, CFO Business Advisors LLC.

Click here: mjbizwire.com

Get A Bank Loan for Your Cannabis Business Before SAFE Banking Passes

There are several factors at play that are contributing to the low-rate lending environment for cannabis businesses. Since March 2021, with the new administration in place in the U.S., rates have come down for some cannabis real estate borrowers as the more aggressive banks, credit unions and life insurance companies are getting involved quietly in the industry with the excess liquidity from PPP and EIDL loans and other circumstances surrounding the pandemic.

Banks are seizing the opportunity to receive additional yield for their portfolios and realizing risks of the federal seizure (which I have not seen one happen where the cannabis company is following all state guidelines) have been minimized in the minds of the lending institutions or are able to be mitigated with structuring the transaction as one that is between a landlord (with different ownership) than the state-licensed marijuana company. Many lenders that I have spoken with want to be in the market prior to the anticipation of the SAFE Banking Act passing, which as of the date of this article, has passed the House. Banks, credit unions, and life insurance companies are also interested in increasing their loan portfolios’ average yield and cannabis represents a marketplace for accomplishing that. When you combine all of those factors and the fact that the actual risk is much lower than the perceived risk, we are seeing more banks willing to quietly and discreetly lend to cannabis companies. You likely won’t see them advertising or being public with this type of lending, but with the right connections, qualified cannabis businesses can obtain much lower rates and longer terms than what the cannabis industry has experienced in the past borrowing from private lending sources.

So who is getting these bank rates?

The larger cannabis companies that are showing positive EBITDA or profits are the main recipients on the low-rate loans. Why? It’s never just one factor, but generally speaking, it will come down to the value of the property and borrower profile. Most cannabis businesses are receiving these rates on traditional warehouses and retail centers in urban areas. For instance, in California, Hollywood is lendable, but Adelanto is not. Banks do not want a foreclosure that will take them a long time to sell and don’t want to have to consider managing a cannabis warehouse.

Another critical factor to consider is that most banks will look at normal commercial value versus cannabis value.  Even though cannabis owners have to spend a lot of money upgrading facilities, on specialized equipment and power upgrades that a normal business would not need, when a bank underwrites the loan and considers the risk of repossessing and foreclosing on the property, they are looking to sell it as quickly as possible and therefore will give you the lower of the commercial value versus the cannabis value. Also, if you’re looking for a cap rate valuation, many times the rents are increased to shift profitability over to a real estate company and banks will only use the normal commercial rent to figure out what the value is using a cap rate analysis to determine the value. One other factor to keep in mind is that when a cannabis business forecloses on a warehouse, many of the small rooms that have been created for the typical cannabis grow will have to be torn down and so the foreclosure process is actually more expensive for a bank when they’re repossessing cannabis real estate.

In keeping with the conservative nature of banks, most will be looking at somewhere between 50 to 65% loan to value. They are also going to be looking for a personal guarantee(s) on the loan in order to secure these lower rates. A personal guarantee is not always required, but they will almost always ask. The only time I have seen this as an exception is for a public company. In general, banks would also like to have your deposit business as well because they are seeking a “relationship” not just a transaction and want to have the opportunity to provide additional products and services. Loan sizes generally range from $1 to $15 million at a 50 to 65% loan to commercial value and a five- to 10-year fixed rate. Those are typically amortized over 20 years for rates that start at 5.5% and go up to 7.5% annualized interest rate with a three- to five-year prepayment penalty.

The following are three tips for securing the lowest rates available:

  1. Be realistic in your valuation and look at other commercial properties and comparable rents and values versus cannabis values.
  2. Have up to date financials available, including P+L and rent roll if it is multiple tenants, as well as copies of the lease(s) available
  3. Be legally banking and in compliance with all state laws as the bank will perform substantial due diligence before issuing a loan

It is critical to do your due diligence on the current rate environment, what’s needed to apply for the loan, and who to consider working with. Also, understand that it’s not the property type that determines the loan amount, but the bank’s underwriting criteria and guidelines and the borrower’s financials. Using a source who knows the state and banks within it is key to securing the lowest rates available and arranging the right loan before rates head higher.

In my next article, I will be reviewing the sale-leaseback transaction process and the benefits and drawbacks of using this type of financing.

Author Bio: Scott Jordan is known as The Marijuana Money man and has been helping cannabis business owners obtain debt capital to grow their businesses since 2009. He is a frequent speaker at industry events and has completed over $70 million in loans for cannabis companies.

Reach Scott at sjordan@altfinnet.com or 720-546-6574

Interview with Tony Frischknecht | Plant Problems Podcast

Although the cannabis industry thrives with potential huge profits as it continues to grow, cannabis business owners face the difficulty of finding more funding options.

Tony Frischknecht talks with Scott Jordan, founder of the Alternative Finance Network that aims to serve cannabis business owners by providing a one-stop-shop for all their loan needs.

Scott tells Tony all about the problems business owners face, from having confusing laws and regulations to high taxes, and getting loans to buy profitable businesses. He also talks about the Safe Banking Act and how it can affect the industry, especially business owners. Learn more about the Alternative Finance Network and see how it can help you if you’re interested in starting a business in the cannabis industry.

Listen To The Podcast Here:

 

Contact Us

9457 S. University Blvd. #817

Highlands Ranch, CO 80126

720-546-6574

sjordan@altfinnet.com