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CBD business loans

There are multiple lenders offering loans to budding cannabis businesses.

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Merchant Growth Business Loan

Merchant Growth Business Loan logo

Borrow up to $500,000

  • Rates from 12.99% - 39.99%
  • Loan terms from 3 - 12 months
  • Free online loan quote
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Funding your CBD business can be a bit complicated, since most of the big banks don’t want to get involved with the cannabis craze. While not as difficult as finding funding for a cannabis business, you still might have to look to alternative lenders to get the financing you need.

What loan options are available for CBD businesses?

  • Term loans. A lump sum for general business use that you pay back plus interest in instalments, usually over three months to five years. You can find a term loan with or without collateral.
  • Lines of credit. Access to funds you can draw from as your business needs, designed to help with ongoing expenses like restocking inventory. You usually repay it in minimum monthly payments like a credit card, although it will depend on the lender.
  • Equipment and vehicle loans. A term loan backed by the equipment or vehicles you need to extract, process, package and transport your CBD products. Typically, you can borrow around 80% of the value of the equipment, which the lender uses as collateral for the loan.
  • Real estate loans. A term loan that must specifically be used for buying land, a warehouse or retail space to create and sell your goods.
  • Bridge loans. A short-term loan your company can use to keep operations going while you wait for a larger loan to come through, such as a real estate loan.
  • Merchant cash advances. Often referred to as working capital, this type of financing is an advance on your future sales, which you repay plus a fixed fee with a percentage of your daily sales.

Pro tip: Look into cannabis lenders

Many online lenders that are willing to finance cannabis businesses will also work with CBD businesses. You can learn more about how they work by checking out our guide to financing your cannabis business.

Compare loans for your cannabis business

You likely won’t be able to walk into your local bank and get approved for funding for your CBD business. Many of the big banks, with the exception of BMO, currently don’t support lending to cannabis businesses – although some may be warming to the idea. Online lenders, some credit unions and smaller banks, such as Alterna Bank, could provide the much needed financing your cannabis business needs. Some online lenders will approve loans to cannabis businesses on a case-by-case basis, but you’ll typically need to have been in business for a few months at least.

Name Product Interest Rate Loan Amount Loan Term Minimum Revenue Minimum Time in Business Loans Offered
SharpShooter Funding Business Loan
Prime pricing from 9.00%
$500 - $500,000
6 - 60 months
$10,000 /month
6 months
Unsecured Term, Merchant Cash Advance, Invoice Factoring
To be eligible, you must have been in business for at least 6 months with a minimum of $10,000 in monthly deposits.

SharpShooter provides capital to small businesses that are underserved by banks and credit unions. It measures overall business health and potential rather than focusing strictly on traditional metrics. Fill out a simple application and get pre-approved in minutes. Receive your funds within 24 hours.
Lending Loop Business Loan
Starting at 4.96%
$10,000 - $500,000
3 - 60 months
$8,500 /month
12 months
P2P
To be eligible, you must have been in business for at least 12 months and have a minimum of $100,000 in annual revenue.

Lending Loop is Canada’s first regulated peer-to-peer lending platform. Complete an application in 5 minutes. Once you accept your loan offer, investors will begin to fund your loan on the marketplace. Your loan will be transferred to your bank account when it is fully funded.
OnDeck Business Loan
8.00% – 29.00%
$5,000 - $300,000
6 - 18 months
$10,000 /month
6 months
Secured Term, Line of Credit, Merchant Cash Advance
To be eligible, you must have been in business for at least 6 months with a minimum monthly revenue of $10,000.

OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.
Loans Canada Business Loan
Prime Pricing from 9.00%
$2,000 - $350,000
3 - 60 months
$4,166 /month
100 days
Unsecured Term
To be eligible, you must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year).

Loans Canada connects Canadian small business owners to lenders offering financing up to $350,000. Complete one simple online application and get matched with your loan options.
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Representative example: Leslie gets financing for her cannabis business

Leslie wants to start growing cannabis in bulk on her farm to sell to distributors and dispensaries. She needs to pay for seeds, growing equipment, renovations, lights, a security system worth at least $5,000.00 as per federal standards, licensing fees, staffing, administrative costs, increased electricity and hydro bills and other expenses she’ll incur during the first year before her business becomes profitable.

Leslie sold a second property she owned to cover most of her startup costs, but she is still short about $150,000.00.

She finds an online lender that offers loans for cannabis businesses and submits an application. With a strong credit rating of 820 and a good amount of equity built up in her farm, Leslie is approved for a 4-year loan with a competitive APR. The lender only requires that 13% of the loan plus interest be paid back during the first year while she grows the business, after which she has to pay back 29% of the loan plus interest each year.

Startup costs + first year operating expenses$750,000.00
Loan typeTerm loan
Loan amount$150,000.00
Interest rate (APR)9.90%
Loan term4 years
Additional feesOrigination fee of 3.50% ($5,250.00)
Monthly payment (year 1)$1,713.45
Monthly payment (years 2, 3 & 4)$4,204.74
Total loan cost$171,932.04

*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.

How to decide which loan offer is best for my business

To find the best loan for your business, start by asking yourself what you need the money for. Need a new extraction system? An equipment loan might be the way to go. Want to buy some more land to grow your hemp? You might want to look into real estate and bridge loans.

Also ask yourself what your priorities are. If you’re interested in the lowest cost loan, you might have to spend some more time on your application — and offer up collateral. After you’ve compared lenders and narrowed down your options, reach out to get a more personalized offer.

What common business expenses can I cover with financing?

You can finance the following expenses for your CBD business:

  • Working capital. Term loans, lines of credit, bridge loans and merchant cash advances can help provide your business with the funds it needs to keep operations running when you need help with overhead expenses.
  • Equipment. You can use an equipment loan to buy hemp harvesting machines, extraction equipment and other tools you need to make and package your product.
  • Vehicles and tractors. A business auto loan can buy vehicles to cultivate and transport hemp and the finished CBD product.
  • Real estate. Specialized real estate loans and leases can help you afford the upfront cost of buying land, a warehouse or retail space.
  • Inventory and raw materials. A term loan or line of credit can help make sure you have the supplies you need to make your products, such as oil and packaging.

What are the eligibility requirements?

In order to apply for a business loan, you’ll need to provide information regarding your business plan, expenses, revenue and more. While it will vary between lenders, documents and requirements may include:

  • Meet any credit score requirements.
  • Meet any minimum age and residency requirements.
  • Have no criminal record and able to pass a background check.
  • If your business is already operating, you may need to meet a minimum gross monthly income.
  • Have a business bank account.
  • Show a solid business plan.

Why do lenders check my personal credit report?

Lenders offering business loans ask to see your personal credit report to make sure you meet the following criteria:

  • Good credit. You and other business partners typically need to have a credit score around 650 or higher to qualify.
  • Record of on-time repayments. Some lenders won’t work with borrowers who have a history of making late repayments.
  • No bankruptcies. A bankruptcy in the past six or seven years could disqualify you from financing.

What challenges might I face as a CBD business owner?

There are two main challenges that CBD business owners face: Legal issues and limited time in business.

Get a license from Health Canada.

To manufacture products containing CBD, you’ll need a processing license. You’ll need to file the appropriate paperwork with Health Canada and pay any required deposits or fees in order to get your license. This license allows you to cultivate, produce and package cannabis. You’ll also need to look into any additional permits and licenses relevant to your province or territory. If you’re going to be packaging cannabis, you’ll also need to apply for the cannabis stamping regime.

After you’ve received permission to pursue a cannabis operation, check that your business will comply with all local, provincial/territorial and federal regulations.

Most CBD businesses are startups.

CBD products are relatively new, so chances are your business is a startup. Traditionally, lenders prefer to work with businesses that have been around for at least one to two years and have a consistent revenue of at least $5,000 a month.

Qualifying for affordable funding before you can meet those requirements can be difficult at a bank, credit union and even some online lenders — even in the safest of industries. Often, your best bet is to work with a lender that specializes in startup financing or to look to business loan alternatives.

4 tips to succeed in the CBD industry

Thinking of starting a hemp farm? Already own a CBD dispensary? Here are a few pointers to maximize your success:

  • Step up your transparency. Savvy consumers will look for ways to verify what’s in your product. Gain trust by having your product analyzed and posting the certificate on your website.
  • Stick to your brand. The best way to set yourself apart from the flood of new CBD businesses is to find what’s special about your product and focus on that niche.
  • Stay on top of the regulations in your area. Laws can change frequently — on the local, provincial/territorial and federal levels. Find ways to stay on top of regulations to avoid getting raided or shut down.
  • Be selective about who you work with. Don’t cut corners on your manufacturers or suppliers if you aren’t a vertically integrated enterprise.

Bottom line

Financing a CBD business is similar to finding funding for a cannabis business – but oftentimes easier, although you can still run into some roadblocks. Make sure your lender is willing to work with businesses in your industry before you apply. You can learn more about your business financing options by checking out our guide to business loans.

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