Starting up or maintaining a hemp business usually means looking for a hemp business loan. The hemp and cannabis industry has not been easy to break into after decades of prohibition. There are financing challenges to be met as the road has not been smooth since its 2018 legalization. However, figuring out where to find hemp business loans and credit in 2021 while challenging is not impossible, being mindful of the issues that must be overcome in the process.

Hemp businesses usually need loans and financing for equipment, real estate, and working capital needed for operations. Often,  a combination of these loans are required by some businesses. The largest loan amounts tend to be granted for commercial real estate purchases.

The hemp industry deals with discrimination from law enforcement along with the issue of the hemp business and cannabis business being confused with each other. The industry has also had to deal with:

  • Delays by the Food and Drug Administration (FDA) in setting regulations for CBD food and dietary supplement products.
  • A large DEA presence regarding very restrictive cultivation rules.
  • A CBD market that is oversupplied and dropping in value.
  • In addition to these issues, the COVID-19 pandemic has hit farmers and startups hard. The upside to all this is that hemp is now legal federally so industrial hemp has financial relief and financing options.

Those hemp businesses that are legal can look for Small Business Administration loans from a financial institution, federal stimulus funds, as well as agricultural grant programs and tax relief at the state level.

There are programs from the Small Business Administration (SBA) that include:

These are programs that include small hemp grower farms so most should be eligible. They are really focusing on Covid-19 and post-pandemic help in 2021. 

The Difference between Hemp and Cannabis Businesses

Speaking of funding, cannabis businesses meet more obstacles compared to hemp businesses due to the different status of these two resources. According to the 2018 Farm Bill, hemp is no longer subject to FDA regulation (as it contains 0.3% or less THC, the psychoactive component of the plant) which makes it easier for hemp companies to find financing options. In contrast, marijuana is still monitored by the federal and state government because of its high THC concentration. 

Challenges You Meet before You Find Hemp Business Loans and Credit

Despite the unprecedented growth the cannabis industry is experiencing today, it’s still challenging to get a loan because of incomplete legislation and regulations. Being legal on the state level, cannabis is still illegal on the federal level.

Even though the cultivation of cannabis has been completely legal for two years since Farm Bill 2018, lending institutions have not accumulated enough institutional memory when it comes to overcoming the difficulties existing in selling products derived from the plant. Therefore, many banks keep staying away from lending to cannabis companies, while other lenders may target some sectors of the industry but not others.    

However, in states where cannabis for medicinal and recreational purposes for adults is legalized, local financial institutions are certainly becoming more resourceful than the big national banks. As experience suggests, some credit unions try to find loopholes in legislation that allow the cannabis businesses to work with them.

Unfortunately, this type of loan is still a gray and complex area, making it difficult for business owners to find financial solutions.

That being said, while more and more local banks find ways to provide financial services such as checking and savings accounts, cannabis business loans are still quite difficult to find due to a number of problems including the following:

Cash business

Cannabis is mainly a cash-based industry which is a high-risk factor. Cash is harder to trace, and cannabis businesses without checking accounts mean that businesses aren’t able to provide banking statements or credit ratings.

Lack of credit ratings or credit card statements is a serious red flag for both lenders and sponsors, especially without collateral. If the marijuana company does not fulfill the payment, the lender will have nothing to collect or collect while trying to get their money back.

High Risk 

The legal restrictions mentioned above and cash transactions make the industry a high risk, but that’s not all. Any bank insured by the FDIC is not willing to work with the cannabis business because of the FDIC’s rules on lending to high-risk companies, as well as possible backlash from the public, violation of federal law and the subsequent possibility of a federal raid. In addition, banks that provide loans to drug-related businesses can be prosecuted if the business violates state law by selling cannabis to minors or transporting cannabis across state lines.

Some companies bypass this legal gray area by contacting only state-owned banks. Interstate lending is a regulatory issue, so, for example, Colorado recently opened eight banks to finance a thriving cannabis growing business.

Green Rush

Today the number of companies who have flocked to selling hemp-derived CBD is so big that banks have a tough decision to make: which company is worth funding and which one will fall below expectations? To prove your eligibility you will need to make it through the lines of competitors.

Available Hemp Business Loans

(EIDL) Economic Injury Disaster Loans 

The EIDL goes up to $2 million that can be utilized to help with payroll and outstanding bills during the pandemic. Hemp production businesses can also get a $10,000 advance that does not have to be repaid if it is used to help with paid sick leave, keeping employees on the payroll for retention, helping with costs that have increased due to interrupted supply chains, rent and/or mortgage payments or loan payments that cannot be paid due to lost revenue.

Paycheck Protection Program

The Payment Protection Program also has loans to help hemp businesses. People who borrow from this program can use it to cover payroll, rent and/or mortgage as well as other costs. The loans may be forgiven and are assessed and processed on a first-come, first-serve basis. When they run out, there is a high probability that they may be topped up.

Express Bridge Loans

Along with these two loans, the SBA has Express Bridge loans. These are loans that can be obtained quickly for up to $25,000 specifically for disaster-related use. They can be processed fast and used to bridge the financial gaps until the EIDL or PPP loans come in. These Express Bridge loans must be repaid to a certain extent when the EIDL or PPP loans come in.

Cultivator Support

Along with the SBA programs, the CARES Act has relief funds available to the farming and ranching sectors. These include:

  • $9.5 billion that goes to the US Department of Agriculture (USDA) to help farmers and ranchers.
  • $14 billion to the CCC (Commodity Credit Corporation) so the USDA can create new programs to support agricultural businesses.
  • Extensions on the repayments of commodity marketing assistance loans.
  • The USDA now has a $19 billion agriculture relief package in place so farmers can get payments solely based on the losses they have incurred. This package includes $500 million for other crops which includes hemp.

Signup for the Coronavirus Food Assistance Program (CFAP 2) will begin September 21st and run through December 11, 2020. But you can check the government website for updates. 

However, with these loans, work is still being done to make sure that hemp has the designation of a specialty crop and making sure that commercial producers are loan eligible in states that are under the 2014 Farm Bill programs.

Further Loan and Grant Assistance

While emergency loans and support are important in 2021, there are other grant programs at all levels of government that can support hemp farmers that are not emergency related.

There are Farm Service Agency loans that can be applied for that include:

  • Direct operating loans
  • Small loans (Microloans)
  • Loans for direct farm ownership
  • USDA Organic Certification Cost Share Programs
  • Loans for farm storage facilities
  • Loans designated for minority and women farmers, startup farms, Indigenous American tribes, and more.

The USDA can help those in the hemp industry find resources. They can direct businesses to available programs and help with assessing eligibility.

Options Other than Federal

There are other loans and credit options beyond those at the federal level. There are state and local programs for relief in 2021 as well as grant programs targeted at the agricultural industry.

Colorado is a good example of where loans, credit, and grants can be found. They have the Beginning Farmer Program, Community Block Grant Fund, and other options to help businesses in the hemp industry.

There are also tax relief programs that hemp businesses can use at both the state and federal level. These are similar to some of the COVID-19 relief funds as they look at employee retention, deferring payroll taxes, and employment payment support.

There are also private companies that are willing to look at loans and offer credit to hemp companies. They often are businesses that are a bridge between a lender and the company itself. These investors are often willing to assess both cannabis and hemp companies for investment. Be careful to conduct your due diligence when dealing with companies and lending. Using a knowledgeable cannabis lawyer, cannabis bookkeeper and accountant, and other consultants can help find reputable companies who can direct you to reliable financing.

Hemp Financing Tips

Investors want to make sure that they will make a profit providing a loan for your business. To qualify, you must:

  • Have an operating business for a minimum six months.
  • Have at least a 500 credit score.
  • Have a commercial bank account.
  • Be established as a corporation S or an LLC.
  • Pass a background check.
  • Have a gross monthly sales of at least $10,000 or a solid business plan.

There are several types of loans, depending on your hemp business. Among good options are:

Bridge Loans

They may also be called “temporary loans” or “gap financing”. These are short-term loans that your business can use in the middle of the application process for long-term funding. Their main advantage is that you can start off operations with no delay, but be aware of their high-interest rates and mandatory collateral. 

Merchant Cash Advances

This type of loan technically isn’t a loan itself. It doesn’t provide a permanent funding resource but gives a short-term cash injection which you need to pay back with each payment you get from your customers. Lenders usually require daily, weekly, or monthly basis returns with a fixed amount or percentage from your sales.

Private Loans

Nowadays private lenders are the main alternative to banks for hemp business funding in 2021. Each of them has its own list of requirements for entrepreneurs, and some lenders don’t even fund certain fields in the industry, for example, growing or cultivation. Before applying make sure that your lender is interested in your sector.

Dama Financial

Dama Clients receive access to secure online banking and cash courier services that minimize the financial and safety risks of having large amounts of cash on hand. Deposits can be made with cash (via courier service), checks or electronically (ACH or Wire). Payments can be made electronically or by check.

National Business Capital & Services

National Business Capital & Services started serving the cannabis and CBD industry through its new program, CannaBusiness Financing Solutions.

National Marijuana and CBD Lender

Diamond Business Loans

Diamond Business Loans is a Direct Lender, Brokerage, and Syndicate. From startups to well-established marijuana businesses, the company has a suitable financing solution for all.



GoKapital works with national lenders to avail merchant cash advances to marijuana businesses. The company offers better loan approval rates than many local banks.



Next-Financing works with its lender partners to offer working capital, ACH and MCA loans, along with advance consolidations, term loans. Invoice financing and equipment financing to name a few of their available programs.


First American Merchant

First American Merchant accents merchant cash advance applications from cannabis and CBD dispensaries. A merchant cash advance is receivables financing that allows you to sell some portion of your future sales to a lender at discount.


Hemp Financing

While hemp businesses are legal at the federal level and should get relief and support like other businesses, it can be difficult. The issues around CBD businesses due to the FDA’s limited position on CDB products and their legality can also cause a stall in funds. However, there are loans and credit available, and finding a way through the system to get them is important.

Whether businesses are looking for emergency funding, money to maintain or start a hemp business, there are now more ways to find it. Apply to the federal and state governments and use companies who know reputable private lenders. All can help build your hemp business and get the company the best return possible in 2021.

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