Hemp Business Loans ...

Hemp Business Loans Summary

The need for hemp business loans has grown dramatically with the passage of the U.S. Federal Government law in September 2018 that classifies Hemp and CBD as legal to grow and distribute. More companies see the great opportunity to grow, manufacture and distribute hemp products to meet the extreme demand currently in the U.S. and abroad. These businesses need loans for financing their farm land, farm equipment, buildings, construction, extraction equipment, working capital and more.

We have hemp business loans for all these purposes and look forward to helping you obtain the funding you need. Your company may be looking to capitalize on the demand for hemp CBD products or going the less travelled route with industrial hemp to meet the growing demand for hemp clothing, hemp food products, hempcrete, hemp bioplastics and applied materials – either way we have financing options for your purpose.

One of the challenges with funding hemp businesses from a lender perspective is lack of track record of the business since it is a newer industry. Most hemp companies naturally do not have income and industry experience over years they can document. For this reason, hemp lenders may ask for other assets to securitize the loan such as real estate and equipment to help reduce the risk of lending to a new business in a new industry (albeit old for industrial uses when you look at the long term history).

Lack of collateral can be overcome by having enough income and/or cash from other sources to support your loan payments.

Hemp Loan Types

Hemp Real Estate

You may need help 1. purchasing farm land 2. buying a warehouse for indoor cultivation and manufacturing 3. constructing a building from ground up 4. making improvements to land and buildings or 5. refinancing existing property to obtain compliance for the hemp use of the property or obtain cash out for use on your project. To get started with a hemp real estate loan, Pre-Qualify Now or Contact Us with a little info on your project including loan amount and use of funds and we will promptly connect with you and see what kind of solution we may have for your needs.

Hemp Equipment

Overwhelmingly the most prevalent request we receive for hemp equipment financing is for extraction equipment. The booming CBD retail and wholesale market for crude, distillate, finished oils and tinctures along with isolates is creating the need for this financing. We also see many requests for hemp farm equipment financing, lighting, labs, drying and more. We provide financing for all these loan requests. To get started with your funding, Pre-Qualify Now.

Working Capital

You may need a hemp loan to cover soft costs like salaries, leases, marketing, licenses, inventory and more. Because working capital is unsecured, few lenders offer this option due to the risk however we have a program that can help you. We can sometimes offer these unsecured loans based on good credit, (minimum 650+, preferably 700+) and income history personally and professionally as part of a secured loan involving real estate. In this case, we bundle the working capital with a hemp real estate loan.

Project Financing

Some loan requests are larger in scope for those operations having expanded growth plans. These hemp loans often involve a combination of real estate, equipment and working capital and are considered project financing if the loan request is $10M+. We provide such a program with very attractive financing including low interest rate and long financing term. The real estate and equipment serve as collateral for the loan and is up to 100% financing. This means you may not have to cover the down payment costs typically required for hemp properties and equipment. Contact Us for more information and let us know the loan amount you are seeking and the use of funds.

How To Apply for A Hemp Business Loan

Tell us a little about your business and your loan request so we can see what kind of a fit we have with your project and our loan program. Contact Us

Top 5 Factors in Obtaining a Hemp Business Loan

In a word, hemp lenders are assessing one thing - risk. The lower the risk you and your company present and can document personally and with your business, the greater the chance you have of receiving a loan. If you do not have all of these risk factors covered, it does not mean you cannot get approved for a loan. Each lender is different and one who has a higher risk tolerance may be satisfied with one or two of the risk factors covered. Here are the top 5 risk factors hemp business lenders assess in no particular order:

1. Real estate equity – do you own the land and/or buildings for the property your business is or will be located on? If so, are you willing to provide the property as collateral (preferably 1st lien position) to secure your loan request? If you do not own and have equity for your hemp business, do you have other commercial properties you would be willing to pledge? By showing that you have equity in real estate, your loan request is seen as less of a risk vs. leasing for example because the lender has something to fall back on if you default on the loan.

Lenders in general like properties that are closer to metro areas which provides greater assurance that a property can be readily sold by a lender if they have to take it back.

2. Income – do you have enough income to support the loan payments? Since many hemp businesses are startups these days, they often are not showing income on their current business yet. These borrowers often assume that a lender will lend based on their projected income.

This is usually not so for debt financing. Lenders who will loan solely based on future income projections are not debt lenders; they are equity investors who will take a portion of ownership equity in your business in order to provide you with capital. Debt lenders will certainly want to see that you have income projections (proforma financials) however they are more interested in your current income related to your ability to make the loan payments now.

If you are a startup, most lenders will consider income from other businesses or jobs that you and your partners (if you have partners with ownership interest in your business) have. This is called cross-collateralization of income. Obviously, the more income you can document via tax returns and/or bank statements, the less risk your loan request poses.

3. Cash on hand – in lieu of income, hemp debt lenders will consider your bank balance for cash to establish ability to make your loan payments. This may come from your own savings personally or from your business. It can also come from capital raises you have completed with cash in the bank. Having a sufficient amount of cash in the bank assures the lender that you will be able to carry your business and make the loan payments.

If you are pre-revenue, a hemp lender will want to see that you have enough other income or cash on hand to sustain your business for 6 months of operation prior to income being generated for your new business.

4. Business Foundation – how ready is your business to be successful? The lender will require that you have all the required municipal and state licensing and permitting in place prior to your loan request being funded. They will also prefer that you have suppliers and buyers.

For example, if you are a hemp extraction company, the lender will prefer that you have contracts with farmers or other suppliers for the raw material hemp that you are extracting. Likewise, if you have contracts with buyers for your finished product, you are seen as better positioned and more ready to operate your business successfully. As such, you pose less risk to the lender because they see that you have taken the time and effort to establish a solid foundation for your business to succeed.

5. Management Team Experience – some owners of hemp businesses have no experience in the hemp business. If that is the case, they will want to have people on their team that do have experience in order to subvert major mistakes made from not knowing the ins and outs of the business and marketplace. This goes hand in hand with business foundation.