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CBD Friendly Banks: Best Hemp Financing Options

Although many people supported the legalization of CBD products, no one could expect that the industry would experience such an enormous rise in a short amount of time.

Hemp-based substances can now be found on almost any corner, and it is not surprising that more and more companies want in on the profit.

According to various financial projections, CBD sales will go all the way to $24 billion by 2023. This is quite a feat for an industry that was worth less than a billion back in 2018.

What are CBD friendly banks?

With the emergence of CBD, we have also seen the emergence of CBD friendly banks.

For the longest time, banks and other financial institutions didn’t want to do anything with CBD products. There were several reasons for such a conservatism.

First of all, America didn’t have a good legal system that would allow for such a rapid expansion of the industry. By itself, hemp products are quite controversial, and until recently, most banks regarded them as high-risk.

There are also major legal and regulatory differences from state to state, making it really hard to sell and transport CBD across the US. This caused issues for CBD businesses as well. At one point, it was really hard to get a loan if you’re a cannabis entrepreneur.

Even if you got one, you had to pay enormous interest. While marijuana dispensaries could deal with such a situation, things were much more complicated for online companies.

Luckily, things have changed a bit, and now, even some of the biggest US banks are prepared to take a chance with CBD companies.

3 best CBD friendly banks

If you want to get a loan for your CBD business, you shouldn’t simply go with the first option that comes across.

Like with any other type of loan, you need to perform due diligence beforehand. Finding good loan terms can be hard, but it isn’t impossible. Nowadays, some big names in the banking world are willing to offer loans to CBD companies.

This is a good sign, not only for you as an entrepreneur, but for the industry as a whole. It is a sign that things are slowly changing and that the cannabis business is becoming mainstream.

  1. Chase Bank

If you thought that only smaller banks are willing to give you a loan, you should think again. Even the gigantic Chase Bank has started giving loans to CBD companies. As one of the best CBD friendly banks, Chase can meet all your demands. Keep in mind that the institution still has certain reservations, but it is much more open to lending money than it was several years ago.

  1. Silicon Valley Bank

If you’re looking for a proactive, forward-thinking, CBD friendly bank, there aren’t much better than Silicon Valley Bank. This institution is always focused on innovation and technological development. This is precisely why they’re open to the idea of lending money to a CBD organization. According to Silicon Valley Bank, CBD products are regarded as wellness substances. As a result, they’re willing to offer the same service to CBD companies as they would to healthcare providers. Another good reason why you should choose Silicon Valley Bank is that they publish regular reports which are then used by the government to improve their clients’ needs.

  1. North Bay Credit Union

Another reputable bank on our list of CBD friendly banks is North Bay Credit Union. They are openly handling CBD transactions for a while, and they’re really proud of that. The company limits the size of deposits available to CBD companies. That way, they’re managing their capital ratios. Although these types of transactions are still regarded as illegal, North Bay Credit Union is willing to take the risk. So far, they haven’t been penalized by the Federal Law, so there is a good chance they will continue providing the same quality service.

The best 4 ways to finance your hemp company

Of course, the banking loans are just one of several ways you can utilize to finance a CBD business. In practice, the majority of companies rely on a few financing sources. This is really good as it provides certain flexibility.

Here are the 4 main alternatives to traditional company loans:

  1. Financing by a private investor

Private financing is a great way to get your marijuana business off the ground. To make things even better, you don’t need a rich cousin to get that initial inflow of cash. Nowadays, you can simply check the AngelList and connect with a potential private investor. You wouldn’t believe how many people are interested in CBD startups! All you need is a good business plan, and you can find a great angel investor for your project. Keep in mind that most of them will want a part of your company in return. However, if you’re struggling to get cash, this can still be an amazing alternative.

  1. Financing from personal sources

Most of us have some sort of savings. In some cases, these savings can be enough to start a marijuana business. A lot of companies were launched with minimal cash, but with a good idea. If you also have a good idea, your CBD company can go places without spending a dime (or at least, with minimal personal investment). Even if you don’t have any savings, you can create a plan that would allow you to put some money aside. We tend to spend too much money on various trinkets, which is why we’re never able to put anything in the bank. You can also consult a financial advisor who can help you make a savings plan. If you’re disciplined enough, you can make a big enough cushion to start your CBD project.

  1. Reducing your expenses

Now, this isn’t a financing method per se, but it is a good way to regulate your expenses and get out of a financial rut. Most companies go overboard with their initial expenses. They will invest heavily in CBD products, creating an inventory that is too big for their particular needs. Instead of going big, try going small. A lot of companies don’t even need that initial influx of cash; they just need to manage their expenses a bit better. Even if we’re talking about marketing expenses, you can try and limit them as much as possible, that is until you’re able to afford something more than the basic ads.

  1. Personal hemp loan

One thing you need to keep in mind is that you don’t actually need a company loan for your marijuana business. Instead, you can simply take out a personal loan. As long as you have a good credit rating and proof of income, most credit institutions will give you a cash loan without much fuss. This is a perfect workaround, both for you and the bank. Still, you shouldn’t take a personal loan if you’re not 100% sure that your CBD business has a future. For example, you might need to put collateral for this loan, which can endanger the future of your family. While some financial experts regard personal loans as a high-risk approach, you can still pull it off if you do it properly.

The future of CBD friendly bank loans

Even though things look a bit shaky, CBD loans will definitely become more readily-available as time goes by.

The most important thing to keep in mind is that most governments of the world are doing their best to legalize and regulate the substance.

Cannabinoid products have great medical potential, and it would be a real shame to neglect them.

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