Do you run a CBD business that needs certain banking services? If YES, here is a list of 10 CBD friendly banks that accept CBD businesses and give them loans. With the cannabis industry gradually attracting more attention and entrepreneurs, there is a growing demand for CBD business loans .

    These loans provide the capital required for starting and developing businesses that depend on CBD (cannabidiol), the non-psychoactive compound present in cannabis plants. It’s very challenging to acquire any type of funding to start or expand a cannabis-based business because marijuana remains federally prohibited. Until national decriminalization occurs, traditional lenders are basically not free to offer cannabis funding.

    3 Types of Loans Available to CBD Businesses

    1. Bridge Loans
    2. Merchant Cash Advance
    3. Private Loans

    Table of Content

    • a. Bridge Loans
    • b. Merchant Cash Advance
    • c. Private / Alternative Loans
    • 1. Silicon Valley Bank
    • 2. Timberland Bank
    • 3. Chase Bank
    • 4. The Salal Credit Union
    • 5. North Bay Credit Union
    • 6. The Numerica Credit Union
    • 7. The MAPS Credit Union
    • 8. Partner Colorado CU

    a. Bridge Loans

    It’s very important to state that there are various kinds of loans available to cannabis entrepreneurs. There are Bridge loans that are also called “gap financing”, “swing loans”, or “interim financing”. These are short-term loans a company can leverage on while awaiting permanent financing solutions.

    These loans allow businesses to meet immediate financial obligations but they typically have high interest rates. These loans require collateral in most cases. The money can be used for rent, inventory, utilities, working capital , and other expenses that a business needs to cover quickly.

    b. Merchant Cash Advance

    The second kind of CBD loan is known as a merchant cash advance . Merchant cash advance is technically not a loan. It is a funding that is advanced to a merchant based on upcoming credit card and business debit transactions. Cash advances are short-term funding solutions that can provide extra working capital to sustain a business through challenging financial situations but doesn’t provide a permanent funding source.

    c. Private / Alternative Loans

    The third kind of CBD loan is called a Private/Alternative Loans. Non-bank lenders are the most common funding sources for CBD business loans and other types of weed loans commonly sought after within the cannabis industry. These private lenders all have their own requirements for applicants. It’s important to research these requirements before applying for a loan.

    Federal law enforcement and inconsistencies between state and federal laws are mainly to blame. This turbulence began with banks. Federal banks with a reputation to uphold are not so eager to tarnish their reputations and risk legal action by accepting cannabis companies as clients.

    Many well-established companies, who have been riding the wave of cannabis’ popularity since legalization, found banking partners earlier on. Please note that this is not an attempt to endorse any one of the below. It is mainly for informational purposes only.

    1. Silicon Valley Bank

    This bank’s overall commitment to innovation in its mission statement means that it will lower barriers of entry for entrepreneurs in areas where other banks won’t. More than likely, Silicon Valley Bank will provide CBD merchants its science and healthcare industry services, since the bank qualifies CBD as a wellness product. Also, they regularly publish a public policy report to inform government officials of what is needed to better serve their clients’ interests.

    2. Timberland Bank

    Timberland Bank is known as one of the few banks that offer its services to the cannabis industry. Even so, it’s difficult to tell. Unlike its credit union counterparts, this Washington based bank doesn’t appear to advertise its involvement in the cannabis industry.

    But according to Timberland’s SEC filings, the 22-branch bank which has been in operation since 1915 is definitely open for business. The files show that the bank’s operations with the industry may be responsible for an uptick in its business, but it also comes at the price of increasing service charges.

    3. Chase Bank

    Chase Bank opened its business platform for CBD-related bank accounts, but will not offer its payment processing services just yet. More than likely, Chase will wait for the SAFE Banking Act or some other CBD financial services-enabling bill that will make the industry less precarious. Resourceful due to its size, Chase will also most likely wait for data to aggregate on what successful CBD companies look like in order to properly vet potential clients in the future.

    4. The Salal Credit Union

    Salal credit union out of Seattle received thousands of calls when the news broke that they were accepting cannabis accounts. Largely working within the medical industry, Salal has opened around 300 cannabis accounts since 2014. They offer all the basic services, including tax services as well as insurance and even international wire transfers.

    Salal’s regulations include the basic requirements of being licensed within the state, good credit, and no outstanding taxes. Salal requires 10 days to do the necessary background checks on a business, which is much longer than regular accounts, but they do provide services to both Washington and Oregon.

    5. North Bay Credit Union

    North Bay Credit Union is one of the only American banking institutions publicly admitting to handling transactions for cannabis companies, which they do confidentially for companies located in areas north of San Francisco . The credit union limits the size of the deposits that these companies can make in order to manage their capital ratio. Still, North Bay Credit Union risks federal prosecution for handling these transactions — still illegal under federal law — but serves their clients in spite of those risks.

    6. The Numerica Credit Union

    Numerica is renowned as one of the first financial institutions in the country to work with the industry, having opened cannabis accounts as early as 2014. Since then, they have opened more than 200 accounts. They offer all the basic services including wire transfers and direct-deposit for employees, but also have a team dedicated to cannabis business accounts.

    Note that they only serve businesses within communities where Numerica branches operate, namely, the state of Washington. So, if you’re looking to open an account from out of state (or even out of town) you won’t be able to access their services. Finally, they require businesses to be licensed and approved by their community – a roadblock many dispensaries have encountered.

    7. The MAPS Credit Union

    Reports have it that MAPS opened its doors to the cannabis industry almost by accident. As the credit union’s VP of operations told the Statesman Journal, Maps discovered they had cannabis accounts in 2014, before the company even officially accepted them.

    At that point, the Oregon credit union had to make a choice. So, they decided to stick with their customers and have opened more than 100 accounts ever since, but those accounts also come with some strings.

    MAPS monitors every transaction closely and sets an annual inspection of their business, which is a mandatory part of maintaining an account. A failure to schedule that inspection on time can result in the closing of the account. All that extra work means that an account with MAPS costs a $250 application fee as well as another $250 annually.

    8. Partner Colorado CU

    This Colorado credit union not only accepts cannabis accounts, its CEO postponed her retirement to set up a program to teach others in the industry how to do it. Partner began accepting canna-customers as of July 2017 through a program they call Safe Harbor.

    The company’s CEO Sundie Seefried was on the verge of retirement when she discovered that most of the cannabis industry operates on cash. As a result, she decided to continue working with Partner and focused on providing assistance to businesses that want to leave cash behind.

    How to Get Loans for a CBD Business and the Challenges to Expect

    First, you have to understand that the 2018 Farm Bill did not fully legalize all forms of CBD nationwide. CBD can be derived from hemp, a non-psychoactive variety of the Cannabis Sativa plant. The main difference between hemp and marijuana is that hemp contains very little THC (tetrahydrocannabinol) (0.3%), the psychoactive component of marijuana.

    This makes regulating hemp very tricky, since it is virtually identical to marijuana in appearance, smell, and even taste. When it comes to securing a business loan for a cannabis company there are some things to consider outside of the normal lending parameters.

    Traditional lenders aren’t all-in just yet, so it usually requires non-traditional money and even with that, there are some things to consider. Note that even with hard money or asset-backed loans and the high interest rates that come with them, most lenders in this industry thread with enormous caution, even in states where it is legal.

    In the current state of the economy, beggars can’t be choosers. If a cannabis company needs a loan, they must go where options exist, and it isn’t going to be the neighborhood bank down the street. Even the high-rate credit card processing backed loans are hard to secure, as some cannabis companies are having their merchant accounts shut down.

    The CBD industry is just very new, so you have to be ready for limited options along with high fees and rates. There aren’t clear and defined laws and rules laid out that apply to everyone. Until that happens there will continue to be a shortage of funding and loan options for any business tied to cannabis.

    There is a lot of uncertainty when it comes to production and availability in the CBD industry. There is very little upsides for a bank to lend to a cannabis company. Even at high rates there is still risk. Even though CBD containing no THC is legal, there are some states that will not allow it to be shipped to them.

    So this is also a reason for concern. What happens if banks start lending more freely to CBD companies and then the government steps in and shuts some down for selling across borders? Then what?

    Even though the perception is that CBD is legal everywhere, but there are still a lot of confusing details and circumstances. Big banks don’t want anything to do with it just yet. But, once it’s legal everywhere with no limitations and no stipulations, they are all going to want to get in on the action.

    Also, although, banks and lenders have seen hundreds of thousands business plans, anything related to cannabis is new to them. It’s hard to underwrite a business loan when you don’t fully understand the business plan . Will these banks finally understand it and come up with more standard underwriting guidelines? Of course, but that will be until cannabis is fully legal and regulated.

    Conclusion

    The enormous amount of inconsistent information on cannabis business loans is difficult to digest. Unfortunately, for as much information there is to explain why cannabis business loans don’t exist, there are just as few opportunities to access cannabis business funding. But irrespective of how the industry is now, the surrounding legal intricacies around cannabis business loans are constantly shifting.

    Frequently Asked Questions

    1. What Banks Accept CBD Business Accounts?

    The banks that accept CBD business accounts are;

    • Silicon Valley Bank
    • Timberland Bank
    • Chase Bank
    • The Salal Credit Union
    • North Bay Credit Union
    • The Numerica Credit Union
    • The MAPS Credit Union
    • Partner Colorado CU
    1. Can CBD Companies Use Banks?

    Despite the fact that hemp is federally legal and banks are cleared to take on clients, hemp-CBD companies find themselves in an undefined legal bucket. That’s because CBD is still under investigation by the FDA for safety concerns and is technically not allowed in ingestible products until guidance has been issued.

    1. What Is A CBD Merchant Account?

    A CBD merchant account is simply a merchant account that allows you to accept credit card payments, but has been approved by your provider for selling CBD-derived products.

    1. Can Banks Do Business With CBD Companies?

    Yes, but if you run a CBD business, it could be considered a marijuana-related business (MRB). With any MRB, banking institutions must subject you to enhanced scrutiny for risk assessment. Please note that it seems difficult or even impossible to prove from which part of the plant a particular CBD product was made (labelling notwithstanding).

    1. What Do CBD Businesses Need From The Bank?

    CBD businesses need loans and investment from banks. Investing in CBD oil has enjoyed increased popularity over the last few years. Over the last few years, this has led to a significant uptick in the number of people viewing CBD oil as an investment opportunity. Many have seen a great return on their investment with steady growth as the market continues to expand.

    1. What Is A Virtual Bank Account With IBAN?

    A virtual IBAN (International Bank Account Number), or vIBAN, is a phantom current account issued by a bank that permits the account holder to receive an incoming payment and reroute it to a real bank account.

    1. Does Square Accept CBD Payments?

    Square currently allows sellers in the EAP to accept payments for hemp and hemp-derived CBD products that have less than, or equal to, 0.3 percent THC in most states within the United States.

    1. How Do You Process CBD Payments?

    There are four main processing options for CBD brands:

    • Domestic Credit Card Processing
    • Domestic E-Check
    • Offshore Credit Card Processing
    • Payment Terminals
    1. Does PayPal Work With CBD Companies?

    As reflected in their Acceptable Use Policy, PayPal currently does not permit the use of their payments platform for the sale of products containing Cannabidiol (CBD).

    1. Why Is It Important To Have A CBD Merchant Account?

    It is important to have a CBD merchant account because CBD merchant accounts allow, for instance, a CBD business to accept credit cards or other forms of electronic payment.

    1. What Exactly Is A Merchant Account?

    A merchant account is a bank account specifically established for business purposes where companies can make and accept payments. A merchant account serves as an intermediary between customers’ bank accounts and your business’s bank account as electronic payments, including credit card transactions, are processed.

    1. Does PayPal Accept Payments For CBD Products?

    As reflected in their Acceptable Use Policy, PayPal currently does not permit the use of their payments platform for the sale of products containing Cannabidiol (CBD).

    1. How Quickly Can You Set Up Business Banking For CBD?

    Although it can take 15 minutes to apply for an account online, it will normally take up to 4 weeks to complete the process of opening a new company bank account.

    1. How Much Do You Need To Start A CBD Business?

    Although the amount needed to start a CBD business may vary depending on location, niche and whether you open a physical shop or an online shop, you will need at least $5,000 up front to get up and running with your own CBD outlet.

    1. What Are Some Of The Pressing Banking Issues Faced By The CBD Industry?

    There’s a popular misconception that the 2018 Farm Bill made CBD “legal,” and therefore the still-prevailing banking restrictions seem contradictory. The actual effect of the legislation was to remove hemp and hemp-derived products, including CBD, from the U.S. Drug Enforcement Agency (DEA)’s narcotic drug schedule, transferring oversight to the U.S. Department of Agriculture (USDA) as a regulated agricultural crop and the U.S. Food & Drug Administration (FDA) for products intended for human or animal consumption.

    However, the legal confusion arises from the fact that hemp and its derivative products are now considered a regulated agricultural crop, without a regulatory framework yet in place.

    1. How Long Does It Take To Obtain A Compliant CBD Banking Account With Fincann?

    You can obtain a compliant CBD banking account with Fincann as soon as possible. Please note that as a Fincann client, you will be introduced to banking partners that welcome your marijuana, CBD and hemp-related business without workarounds, guises, or the constant worry that you’ll lose your banking relationship.

    1. How Much Does Business Banking Cost?

    Generally, most banks will waive the business account monthly maintenance fee (ranging from about $12-20 per month among major banks) if you maintain a minimum balance.

    1. Is The CBD Industry Growing?

    Yes, the CBD industry is growing rapidly in recent years. As a matter of fact, the global market for cannabidiol (CBD), valued at $9.3billion in 2020, is forecasted to reach $23.6bn in revenue by 2025. With an expected compound annual growth rate of 22.2 percent from 2019 to 2025, the future is looking incredibly promising for businesses tapping into CBD’s explosive popularity

    1. Which CBD Payment Processor Is The Best?

    The Best CBD Payment Processors are;

    • SMB Global.
    • Easy Pay Direct.
    Can CBD companies use banks?
    The majority of the banks do not accept CBD businesses, thus would not accept or process your electronic payments as well. more
    What bank does Coinbase bank with?
    The company works with MetaBank for its Coinbase rewards card. Other popular online finance apps already allow for direct deposit. more
    Is HSBC Bank a good Bank?
    HSBC is a huge bank with a solid reputation. It could be for you if you're looking for a bank with a huge global presence. High net worth individuals also have more of an incentive with premium service and better loan rates. more
    What bank does Chime bank use?
    Chime is a financial technology company, not a bank. Banking services are provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC. more
    Is TD Bank a real bank?
    TD Bank is one of America's largest banks by assets. It maintains 1,220 branches along the East Coast of the U.S., with footprints in 15 states and Washington, D.C. The bank has more than 150 years of history and serves 9.5 million customers. more
    Is Synchrony Bank a real bank?
    Yes, Synchrony Bank is FDIC insured (FDIC# 27314). more
    What makes a bank a bank?
    A bank is a financial institution licensed to receive deposits and make loans. Banks may also provide financial services such as wealth management, currency exchange, and safe deposit boxes. There are several different kinds of banks including retail banks, commercial or corporate banks, and investment banks. more
    Which bank is International bank?
    The best banks for international banking in India are American Express Banking Corporation, Barclays Bank Plc, Bank of America, Citibank N.A, Deutsche Bank, DBS Bank India Limited, HSBC Ltd, Standard Chartered Bank, and others. more
    Is Sutton Bank a real bank?
    A progressive, privately held independent, community bank, Sutton Bank has consistently been named one of the top small business and agricultural lenders in the State of Ohio. more
    Is Ally Bank a real bank?
    Ally Bank is a full-service online bank offering competitive rates, low fees, no minimums and 24/7 customer service. Headquartered in Sandy, Utah, and founded in 2009, Ally Bank is the digital-only banking division of Ally Financial Inc., which has roots dating back to the 1920s. more
    Which bank is Government bank?
    State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, Central Bank of India, Canara Bank, Union Bank of India, Indian Overseas Bank, Punjab and Sind Bank, Indian Bank, UCO Bank, and Bank of Maharashtra. more

    Source: www.profitableventure.com

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