CBD and Hemp Business Loans: Easier Than Cannabis, and Still Not Easy

By MercFinancial · Published 2026-10-21

CBD and hemp business loans exist from equipment lenders, factors, revenue-based funders and some banks, because the 2018 Farm Bill removed hemp from the definition of marijuana. Product type and processor history decide the file.

CBD and hemp business loans are available from a wider set of funding sources than cannabis loans, because the 2018 Farm Bill removed hemp, meaning cannabis with no more than 0.3 percent delta-9 THC on a dry-weight basis, from the federal definition of marijuana. A hemp farm, a fiber processor, a topical CBD brand or an extraction lab is not a federally illegal business, so the SBA, some community banks, equipment lenders, factors and revenue-based funders can write it. Many still decline. Several large online lenders name cannabis and CBD together on their restricted lists, payment processors treat CBD as high risk, and the federal definition of hemp is itself changing.

This guide covers what the Farm Bill opened and what it left closed, which hemp and CBD businesses lenders fund most readily, why payment-processor and chargeback history is the underwriting signal that decides a CBD file, the products that fit, and the mistakes that get CBD files declined.

In CBD the processing statement is the credit report: a brand that keeps a processor for two years has passed the hardest underwriting there is.

What the 2018 Farm Bill changed for hemp and CBD, and what it did not

The 2018 Farm Bill took hemp out of the Controlled Substances Act's definition of marijuana, which is the whole reason CBD and hemp businesses can be banked and financed at all. A licensed hemp grower, a processor making fiber, grain or extract, and a brand selling CBD products made from that hemp are lawful businesses under federal law, and the SBA's illegal-activity exclusion in 13 CFR 120.110(h) does not reach them. Later SBA guidance made hemp businesses, as defined after the Farm Bill, eligible, where marijuana businesses remain excluded, as explained in why banks will not lend to cannabis businesses.

What the Farm Bill did not do is settle how CBD may be sold. The FDA has not authorized CBD as a food additive or dietary supplement ingredient and has sent warning letters over health claims, state rules on ingestible CBD differ widely, and intoxicating hemp-derived cannabinoids such as delta-8 THC drew restrictions in many states. A 2025 federal law, Public Law 119-37, narrows the federal definition of hemp and excludes certain hemp-derived cannabinoid products, with enforcement beginning in late 2026 and some provisions reportedly postponed into December. Confirm the current rule for the products you sell before the file goes out, because the lender will.

Why many lenders still say no to CBD businesses

Legal is not the same as fundable. Several large online lenders list cannabis and CBD together as restricted, and their automated underwriting declines the file on the industry code before a person reads it. Banks that will open a CBD deposit account often decline CBD credit because the regulatory picture is unsettled and because their payment-processing partners classify CBD as high risk. Major payment processors and card networks treat CBD, especially ingestible and online CBD, as a high-risk category with reserve requirements, higher fees and the real possibility of termination.

Underneath the policy is a cash-flow worry. CBD brands sold online carry chargebacks, subscription disputes and refund volume that a lender reads as revenue quality risk. Wholesale pricing for hemp biomass and crude extract fell sharply after the first post-Farm-Bill seasons, and lenders who financed growers on projections remember it. The result is that a CBD file is judged on evidence a conventional retailer never has to produce: proof that the product is lawful where it is sold, and proof that customers pay and keep the product.

Which hemp and CBD businesses are fundable, in order

Funding sources rank hemp and CBD businesses by how far the product sits from the regulatory edge. The order below is a general pattern, and any single lender's policy can differ.

The pattern is that the farther a business sits from ingestion and intoxication, the more closely it is underwritten like any other agricultural or consumer-products company.

Chargebacks and processor history: the signals that decide a CBD file

For a CBD brand, the payment-processing statement does the work a credit report does elsewhere. Lenders ask for twelve to twenty-four months of processing statements and read three things. The first is stability: how long the brand has kept the same processor, because a CBD merchant that has been terminated and re-boarded several times has a problem the lender cannot underwrite around. A placement on the card industry's terminated-merchant list is close to disqualifying for revenue-based capital.

The second is the chargeback ratio. Card network monitoring programs commonly flag merchants whose disputes approach one percent of transactions, and a CBD brand near that line is one bad month from losing its processing, which is to say its revenue. The third is the shape of the revenue: refunds, subscription cancellations, reserve holds and the share of sales that is wholesale on invoice versus retail on card. A brand with clean processing, a low dispute rate and a meaningful wholesale book reads as a consumer-products company. A brand with the opposite reads as a processor termination waiting to happen, no matter what its tax return says.

The funding products that fit a CBD or hemp business

• Equipment financing for extraction, distillation, drying, bottling and packaging lines, from equipment lenders whose policy allows hemp. The equipment is generic enough to resell, which is why this is often the first yes.
• Receivables factoring on wholesale invoices to retailers and distributors, from factors that accept CBD. Advances of roughly 70 to 90 percent of the invoice are common market mechanics, with fees quoted per 30 days. The comparison with purchase-order funding is in invoice factoring versus PO financing.
• Inventory and purchase-order financing for a brand holding a large order from a mainstream retailer, where the retailer's credit carries the deal.
• Revenue-based financing against card receipts, for direct-to-consumer brands, from funders that accept the brand's processor. Fast, and the most expensive per dollar.
• Unsecured term loans and lines underwritten on the owner's credit and the business's statements, covered under unsecured business loans, where the funding source's policy allows CBD.
• Community bank and SBA lending for hemp farms and processors in hemp-producing states, usually with real estate or equipment as collateral, from the minority of SBA lenders whose policy includes hemp.

Mistakes that get CBD files declined

• Health claims on the website or packaging. A lender that finds an FDA warning letter, or the claims that invite one, stops reading.
• Certificates of analysis that are missing, expired or show total THC over the hemp limit for the products in inventory.
• Mixing a marijuana license and a hemp brand in one entity or one bank account, which turns an eligible file into an excluded one.
• Hiding a processor termination or a reserve hold. The processing statements reveal it, and the concealment costs more than the event.
• Applying at lenders whose restricted lists include CBD, collecting hard inquiries and automatic declines.
• Projections built on the hemp prices of a prior season rather than current wholesale quotes.

Where MercFinancial fits

MercFinancial is a commercial funding brokerage in Houston, not a lender, and every loan is made by a third-party funding source that sets its own approval, amount, rate, term and fees. For a CBD or hemp request, the specialist reads the file first: what the product is, where it is sold, what the certificates of analysis and processing statements show, and what assets exist. From a network of more than 160 wholesale and institutional funding sources, it identifies the ones whose written credit policy allows hemp or CBD and the structure requested, places one file with all of them and compares the offers. Availability depends on the funding source, and when the product sits outside every policy, the answer is a plain no with the reason. The wider menu is in cannabis business loans: what financing exists and the cannabis business funding hub.

Frequently Asked Questions

Can a CBD business get an SBA loan?

It can be eligible. The 2018 Farm Bill removed hemp from the federal definition of marijuana, and later SBA guidance made hemp businesses eligible, unlike marijuana businesses. Eligibility is not approval. Each SBA lender applies its own credit policy, many decline CBD, and those that write it want proof the products are lawful where sold, clean certificates of analysis and conventional collateral.

Why do lenders care about my payment processor?

Because for a CBD brand the processor is the revenue. Major payment processors treat CBD as high risk, and a brand that has been terminated, re-boarded or placed on the terminated-merchant list may lose its ability to take payment at any time. Lenders read processing statements for tenure with one processor, chargeback ratio, refunds and reserve holds before they read anything else.

What CBD products are hardest to finance?

Intoxicating hemp-derived products such as delta-8 THC, then ingestible CBD sold online. State restrictions on intoxicating hemp products are widespread, and a 2025 federal law narrows the hemp definition with enforcement beginning in late 2026. Online ingestibles carry chargeback exposure. Topicals, cosmetics, pet products, hemp fiber and extraction equipment sit at the fundable end.

Can a hemp farm get equipment financing?

Yes, commonly. Dryers, decorticators, extraction and distillation systems, bottling and packaging lines are generic enough to resell, so equipment lenders whose policy allows hemp finance them on invoices with a down payment and a personal guaranty. Lenders prefer equipment with a resale market outside hemp, and they may ask for a landlord waiver when the machinery sits in a leased building.

Does a CBD brand need a license to borrow?

Usually not a cannabis license, but it needs its paperwork. Lenders ask for the hemp grower or processor license behind the supply, certificates of analysis showing total THC within the hemp limit, state registrations where the products are sold, product labels free of health claims, and the entity's clean separation from any marijuana business. A brand that cannot produce those is declined on compliance before credit.

MercFinancial is a commercial funding brokerage in Houston, Texas. MercFinancial is a broker, not a lender: every loan is made by a third-party funding source, every request is subject to that source's underwriting and credit approval, and loan amounts, advance rates, interest rates, terms, fees, collateral and guaranty requirements vary by funding source and borrower and are not guaranteed. Nothing here is a commitment to lend or an offer of credit, and financing is for business purposes only. Any example in this guide is hypothetical and illustrative; actual terms and outcomes vary. Cannabis remains a Schedule I controlled substance under federal law; the availability of financing for any cannabis-related business depends on the funding source's own policies and on state and federal law, and nothing here is legal advice. This guide is educational only and is not legal, tax, accounting or investment advice.