Where to Find Hemp Business Loans and Credit in 2020

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 2020 while challenging is not impossible, being mindful of the issues that must be overcome in the process.

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:

  • Paycheck Protection Program
  • (EIDL) Economic Injury Disaster Loans and other advances

These are programs that include small hemp grower farms so most should be eligible.

Available 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.

The Payment Protection Program also has loans to help 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.

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 mustbe 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.

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 2020, 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 2020 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 lawyer, accountant, and other consultants can help find reputable companies who can direct you to reliable financing.

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 2020.

Olivia Solero

Olivia Solero is the Co-founder of Cannabis Stack. Olivia has an unusual blend of creative thinking and the ability to put that thinking into effect. She likes to write; loves to edit; she knows how to lead, follow or get out of the way; she is good with a buck and wicked smart when it comes to data.

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