CBD is always considered as “high risk” for its legal and associated restrictions. In the CBD industry finding a payment gateway or funds to support your business can be a tricky process.
Moreover, as per CBD banking 2021, finding a banking solution that is CBD- friendly can be even more difficult.
The payment gateway is a method that customers use to pay while making a purchase. Whereas, the banking solution is the business bank account, where this money gets stored for you to use.
Since there are many payment gateways for CBD businesses, finding the right banks that accept CBD business in the USA for this “High risk” business can be challenging. Since CBD is a questionable niche, therefore many banks do not accept CBD companies.
While launching an online store, because of the risks and regulations associated with the CBD business, many of you might come across new challenges. The majority of the banks do not accept CBD businesses, thus would not accept or process your electronic payments as well.
I know what you might be thinking! How to know about CBD banks near me? In this blog, you would get to know about top banks in the USA, which are CBD friendly, to avoid catastrophic complications.
Moreover, the types of loans, specifications of CBD-friendly banks, and challenges that you might encounter with such banks are discussed. Keep reading ahead to know all about it!
Why is it Important to Find CBD Friendly Banks?
Are you starting a CBD business? Well, this might sound like a fun endeavor, but there are certain things that you need to know about CBD or hemp banking!
If you are running an online CBD business, you will need to set up a business account for your company.
Any type of business account can help your company to accept and process multiple types of electronic payment, including debit/credit card, etc.
Without any shadow of a doubt, business accounts have become an impeccable necessity for any type of e-commerce business.
It is so because the business account for your company can help in processing and transfer of money from the customer’s bank account to that of your business account.
Apart from having an account, another significance is that such banks can approve loans for the verified business as well.
For example: If you are planning to start a hemp business, you might require a loan as capital or a hemp business bank account for secure transactions. You might want to pursue via deceptive methods.
However, please note that there are many reasons why this would not work out!
Due to risks and regulations associated with CBD business, a non-credible CBD business checking account will leave your business unable to process payments.
Above all, such devastating situations can lead up to the loss of revenue, brand credibility, and loss of customer loyalty as well.
Therefore, the need of the hour is to look for banks that accept CBD business thus to secure your startup from landing in distressing situations.
What Are the Types of Loans Available For CBD Businesses?
Since the cannabis industry is gaining immense popularity, there is an increasing demand for CBD business loans as well.
As mentioned above, this “high-risk” business can be quite stressful to establish. Therefore, these loans provide significant capital to establish and develop the business.
However, it is important to note that the amount of required capital is dependent on the type of cannabis and products your business deals in.
Under the restrictive labels, it gets really challenging to acquire any type of loan for a CBD business. Since some of the CBD products are still prohibited and illegal, therefore, no bank is free to offer CBD funding except for banks that are CBD-friendly.
The Types of Loans Available for CBD Businesses Are as Follows:
These loans are also known as swing loans. Bridge loans are relatively short-term loans for a business that awaits an immediate financing solution.
These loans are typically used by businesses to cater to immediate financing obligations.
Bridge loans have a higher interest rate thus, they are only preferable for project capital, utilities, and other expenses which need immediate satisfaction.
Merchant Cash Advance
The second type of loan available for CBD businesses is the merchant cash advance. I would not label it as a loan because this type of funding includes payment in exchange for an agreed-upon percentage.
This percentage is decided as per the credit and debit card transactions or future sales of your business. Unlike bridge loans which are short-term funding solutions, a Merchant cash advance can provide permanent funding solutions to your business.
Third and the final type of loan is the private loan. These loans are provided by non-bank lenders.
Since each of the lenders might have their subjective requirement of applications, therefore it’s important to research before you apply for this type of loan.
However, it’s noticeable that non-bank lenders are the most common funders for CBD businesses and other types of loans in the cannabis industry.
Top 8 CBD Friendly Banks in the USA
Due to the legal framework regarding CBD business, your neighboring bank might reject any CBD relation transactions.
But, thanks to some of the renowned banks in the USA which offer CBD-friendly policies. Read ahead to know more about them!
Silicon valley bank is famous for its innovative aims and policies. Their commitment to innovation clearly dictates that they will lower restrictions and barriers for new entrepreneurs, which the other banks don’t.
Since Silicon Valley bank accepts CBD as a healthcare product, therefore they can offer CBD startups their healthcare industry services.
Moreover, since most of the banks don’t advertise their acceptance for CBD businesses, therefore, SVB publishes a public report to inform government officials about what amendments are required to enhance their client’s experience.
Timberland bank is another Washington-based bank, which offers its services for the cannabis industry.
Like many other banks supporting new entrepreneurs, they also do not advertise their involvement in the cannabis industry.
Since its early advent in 1915, timberland bank is always open for business. As per the shared reports, this bank’s involvement with the CBD industry has led to its success as well.
However, please note that this success mainly came at the cost of increased service charges, which means that, for being open to the CBD industry, this bank concerns higher service charges as well.
Chase bank offers an open invitation for CBD business banking. Are you thinking of choosing Chase bank hemp accounts?
Well, let me tell you that Chase bank is CBD friendly but they don’t offer their payment processing services yet.
Chase bank might be waiting for some new legal framework that would make the CBD niche a little less precautious.
Instead of opening wide gates for the cannabis industry, Chase bank will wait for data to aggregate thus exploring what a successful CBD business looks like to cater to potential clients in the future.
The Salal Credit union is largely famous for its working within the medical industry. By accepting the usage of CBD as a healthcare product, they are among the top banks which are CBD friendly.
Ever since they started accepting cannabis accounts, they have opened 3000 accounts for the cannabis business.
Their prominent services for CBD include insurance, tax services, and international wire transfers as well.
However, when it comes to authentications, Salal credit union takes up to 10 days for background checks on business. Their requirement for acceptance includes the basic requirement of being licensed with no outstanding taxes.
Even though the period for cross-checking is longer than regular accounts, this bank surely provides services to CBD businesses in Washington and Oregon.
This bank is known for being the only banking system in America that publically accepts providing transactions for CBD companies.
However, North Bay credit limits the number of deposits a company can make to manage its capital system.
Despite still being at the risk of prosecution for handling transactions, despite still carrying out an illegal task, this bank is still focused on serving its clients in the best possible manner.
Numerica is one of the very first banks to work with the cannabis industry. As early as 2014, the bank started offering its services to CBD companies.
Their prominent services include wire transfer, deposits, and a specific team dedicated to the management of business accounts. Ever since its advent, the bank has opened 200 cannabis accounts.
A very minor drawback is that Numerica only offers its services to where its branches operate. So if you are looking for a business account from out of the state, you won’t be able to access the services.
As per the reports, MAPS opened up its services to the cannabis industry by accident. However, ever since then, they have stuck with their customers to provide them with the best.
Up till now, they have opened 100 accounts. I know what you might be wondering. The accounts are quite a few because of the strong restrictions attached.
MAPS requires permission to access each transaction closely and demand an annual inspection of the business as mandatory for having an account.
If by any chance you fail to schedule an inspection, it can result in the closing of your business account.
Partner Colorado Credit Union
The Colorado CU is not only renowned for accepting cannabis accounts, but they are also famous for teaching others in the industry how to do it.
Since most of the cannabis industry works on cash, therefore, their team decided to work on some policies to work with cannabis businesses that want to leave cash behind and switch to the digital method of managing it all.
Challenges That Might Occur!
When it comes to funding or supporting the cannabis industry, banks and even local funders fear legal restrictions.
Despite the asset-backed loans, percentage-based loans, or high interest rates, most of the lenders fear working with the cannabis industry due to extreme caution.
This restricted approach towards CBD is everywhere! Even in the states where it is considered legal as well, which can be challenging.
Considering the ongoing state of the economy, there aren’t many options for CBD companies. For instance; if your company requires a loan, then there aren’t many banking options to choose from.
This poor economic crisis is leading to many CBD businesses losing their accounts. Thus, finding a credible and reliable bank can be quite challenging.
Apparently, CBD is everywhere, but there are still many states which do not classify it as legal. There is great uncertainty when it comes to the production and availability of CBD products.
There is a very minute benefit to banks for lending loans and providing CBD accounts. Even though THC-free products are considered legal, yet many of the states don’t want them to be shipped to them. All of these restrictions ultimately cause accessibility issues for CBD companies.
The confusing and inconsistent information about CBD banking is difficult to digest. Yet, it is evident enough why CBD banking is not that common as regular banking.
As per available information, indeed, very few opportunities are available for the cannabis business, but a better framework can be expected considering a constant shift in the CBD industry.