Cannabis Equipment Financing vs Term Loans: Which Fits Your Dispensary?

Dispensary owners buying POS systems, security, display cases, vaults, or delivery vehicles usually choose between two options: equipment financing or a general business term loan. They work differently, and the wrong pick can cost you.

How Equipment Financing Works

The lender pays the vendor, and the equipment secures the loan. Terms usually match the equipment's useful life, often 2–5 years. Because the lender can recover the asset, cost is typically lower and approval can be easier.

How a Term Loan Works

You get a lump sum to use across the business: equipment, build-out labor, inventory, permits. Repayment is fixed over the term. For cannabis, term loans come from private lenders and usually cost more than equipment financing.

Side by Side

Cost: equipment financing is usually lower; term loans higher.
Use of funds: equipment financing covers the equipment only; term loans are flexible.
Collateral: the equipment itself vs. business assets and often a personal guarantee.
Speed: both can move quickly; equipment deals need vendor quotes.
Soft costs: install and labor are sometimes included in equipment financing, sometimes not. Term loans cover them.

When Equipment Financing Wins

Most of the cost is hard equipment with resale value
You want to keep cash and credit lines free for inventory
Your revenue history is short, but the equipment is solid collateral

When a Term Loan Wins

Much of the project is labor, construction, or soft costs
You're opening a new location and need one source of funds
You're buying an existing dispensary

Using Both

Many owners finance the hard equipment and use working capital or a term loan for everything else. That keeps the most expensive money as small as possible.

The Bottom Line

If it has a serial number, finance it as equipment. If it doesn't, look at a term loan or working capital. Send us your quotes and we'll structure it.

Start your cannabis funding application →

California Business Capital | Fresno, California | info@cabizfunding.com | 559-549-4717

Cannabis Equipment Financing vs. Business Term Loans for Dispensary Owners