Are you about starting a hemp processing company? If YES, here is a detailed sample hemp processing business plan template & FREE feasibility report. Hemp is a distinct variety of the plant species Cannabis sativa L. that grows to a height of anywhere from 4-15 ft. (1.2-4.5 m) and up to 0.75 in (2 cm) in diameter. This plant is made up of an inner layer called the pith surrounded by woody core fiber, which is often referred as hurds.
Bast fibers form the outer layer. This bast fiber is mostly attached to the core fiber by pectin—a glue-like substance. The primary fibers are used for textiles, cordage, and fine paper products. The wood-like core fiber is used for animal bedding, garden mulch, fuel, and an assortment of building materials.
Because of its similar leaf shape, hemp is mostly confused with marijuana, another cannabis plant. Although, the key difference between the two is their tetrahydrocannabinol (THC) content, the ingredient that produces the high when smoked. Note that marijuana can consist of as much as 20 percent THC, compared to less than 1 percent for industrial hemp.
But even with this difference, some countries are redundant to legalize growing of hemp (especially the united states), since there is a fear this will make it more difficult to control the use of the plant. Most hemp varieties also have a hollow stalk that have a very high fiber content (35 percent), in contrast to marijuana varieties that usually have a solid stalk having low fiber content (15 percent).
Starting a hemp related business is easy. But if you’re not going to cultivate your hemp or you plan to get it from others, then one vital key is to locate a supplier that won’t pull back when he/she/it gets a better offer. Issues of concern include resin content, purity, feminization, freedom from contamination, and, of course, cost.
You will also need a great business plan to present your opportunity to partners, stakeholders, investors, lenders, vendors, major customers, service providers, and regulatory and licensing agencies.
Have it in mind that a detailed business plan will include information on scores of subjects, but you can start with the business summary and model, market-entry plan, products and services, market analysis, SWOT analysis, team, metrics and milestones, financial strategy, and marketing plan, among other subjects.
A Sample Hemp Processing Plant Business Plan Template
Table of Content
- 2. Executive Summary
- 5. Job Roles and Responsibilities
- 6. SWOT Analysis
- 7. MARKET ANALYSIS
- 12. Startup Expenditure (Budget)
1. Industry Overview
According to reports, the US retail consumer market for hemp CBD was estimated to have been $591 million in 2018 and projected to reach $22 billion by 2022 – a CAGR of 147 percent. Meanwhile, a huge part of the modern hemp industry relates to CBD (Cannabidiol), a medically-useful substance that is believed to alleviate swelling, promote relaxation, and is already being added to thousands of consumer products (topical, creams, pet foods, food, and beverages).
CBD can be extracted from either marijuana or hemp, but legal CBD needs to come from hemp unless you are in a legal marijuana state. Also note that there are many different parts of the industry and varying business choices to pick from: cultivation, harvesting, processing, extracting, distributing raw material, manufacturing consumer products, promoting events, providing information services, offer scientific services to genetics or testing, provide business consulting or other professional services, and much more.
In recent years, the U.S. situation on hemp is continually changing. As of this writing, 33 states (+ D.C.) allow the distribution of medical cannabis with THC (marijuana), and 11 states (plus D.C.) allow recreational cannabis with THC.
The cultivation of industrial hemp (again, not more than 0.3 percent of THC in the biomass) is now federally legal in all states. But, marijuana is still federally illegal (as is hemp with more than 0.3 percent of THC) as a listed Schedule 1 substance.
To add to the regulatory vibe, the federal legality of industrial hemp cultivation does not supersede state, county, or local regulations. It simply means a state, county, or city can impose greater restrictions than the federal government has. Presently, about 15 states have come out with pro-hemp laws; the rest of the states are silent or vaguely neutral. Note that many states, counties, and cities simply haven’t yet gotten their respective arms around all the issues.
In general, you can’t cultivate hemp in any specific U.S. county without a permit. Also, the FDA currently bars the inclusion of CBD in food products. Also, interstate transportation of legal hemp is legal, but not all the states, counties, cities, and law enforcement agencies understand this.
Banks, also, are maintaining their distance from cannabis companies, pending the possible enactment of the (SAFE) Banking Act of 2019 that prohibits federal banking regulators from penalizing banks that offer cannabis-related financial services.
2. Executive Summary
Earth Hemp Fiber LP. (EHF) has been formed pursuant to the laws of the State of Illinois for the sole purpose of establishing a commercial facility that will process and market products made from industrial hemp straw. Our focus at EHF will be to capture the value from the superior qualities of hemp fiber.
These fibers have been well known throughout much of history for its strength and durability in a variety of uses that includes rope and high quality paper, canvases and textiles dating back several thousand years to early india and China.
Industrial hemp is gradually showcasing the potential to be a part of a growing trend towards developing “renewable” sources for industrial products currently sourced primarily from “non-renewable” sources. Presently, there is no commercial hemp fiber processing facility in the US to supply and grow these markets.
To properly pursue these opportunities, EHF has been established and will construct a processing facility in Illinois capable of processing up to 48,000 metric tones annually of hemp straw into Bio fiber and by-products.
Our “Pilot Processing Plant” will be used to continually innovate and reengineer the small scale fiber processing technology that is currently operating in Asia and Europe. The potential for growth for hemp bio fiber production and processing is very encouraging.
Our Pilot Processing Plant at EHF will focus on a selected small number of well-developed and accessible markets with a reputable range in quality requirements. Our Pilot Processing Plant is projected to achieve 30 percent (14,400 metric tones) processing capacity in the first year of operation, growing to 50 percent (24,000 metric tones) in year two, and just over 80 percent (38,400 metric tones) in year three.
Earth Hemp Fiber is owned by the General Partner, Earth Hemp Fiber Ltd., and the initial limited partner, Mansa Moore. After the offering, Earth Hemp Fiber Processing Cooperative Ltd. (EHFPC Ltd.) will become a limited partner, along with those individuals and entities that purchase units pursuant to the offering. After the offering, the initial limited partner, Mansa Moore, will no longer be a limited partner.
The capital requirements for Earth Hemp Fiber LP. are projected at approximately $18 million, and include the construction of our 48,000 metric tones Pilot Processing Plant and the purchase and reengineering and modification of equipment from Asia and Europe. Our start-up requirements are projected at approximately $2.2 million, and include initial inventory requirements and general start up expenses.
Financing requirements are expected to be funded through a $3.5 million flexible loan from the state of Illinois and traditional financing of nearly $9 million. The remaining $6.5 million is to be raised in 2021 through an offering of Earth Hemp Fiber LP (EHF) units on the financial market.
The modification and reengineering of the equipment and the construction of the plant is expected to require approximately 11 months, followed by two full years of limited production during the pilot testing of the processing and products.
We expect to achieve $2.98 million in revenue in 2021, the first 11 months of pilot operations, growing to $8.73 million by the end of 2023. Also, based on a gross margin of 46 percent, we hope to achieve break even with approximately $6.8 million revenues in 2023, or at approximately 79 percent of 2023 projected revenues.
3. Our Products and Services
EHF Pilot Processing Plant plans to focus on a selected small number of well developed and accessible markets and users that have a range in quality requirements. To mitigate risk, we will first establish basic markets for primary processed fiber to create cash flow.
Immediately these have been established, EHF will move forward on the processing and manufacturing of hemp fiber insulation. We believe that these non-woven products will replace non-renewable products like fiberglass insulation in the construction industry and plastic mulch used in the horticulture industry.
Products such as fiberglass insulation and plastic mulch always need heavy loads of non-renewable energy sources during their manufacture which emit greenhouse gasses. By comparison, an automated mechanical process that releases little to no greenhouse gasses will be used by EHF for the manufacture of bio fiber insulation and other products.
We also plan to adopt a zero waste process in the plant, processing the industrial hemp raw material into three products, pure bast, fiber, hurds and fines. Pure bast fiber makes up 35 percent of the raw product. The fiber can then be sold to the paper and cardboard recycling industry or further processed for value-added non-woven matting products such as biofibre insulation for the construction and building industry, and other bio fiber matting products such as those used in the horticultural industry.
Hurds/shives make up 50 percent of the plant material, and is a light and absorbent substance, which is a high quality animal bedding, such as race horses, and the small pet market. The fines, which makes of the final 15 percent of the plant, can be used to manufacture products that are used for sources of heat, such as fire logs, which will either be sold for retail or used as an energy source for the Pilot Processing Facility.
4. Our Mission and Vision Statement
- Our vision at EHF is to become the recognized leader in the hemp processing industry.
The following points make up the ideals of the mission statement of Earth Hemp Fiber LP:
- Import and adapt technology to process industrial hemp fibre.
- Initiate a new crop and a new value added processing industry to the region
- To build a Pilot Processing Plant that will create a repeatable, vibrant industry in a multitude of rural communities in the US.
- Demonstrate the ability to process industrial hemp fibre on a commercial scale suitable to American conditions.
- Demonstrate hemp fibre products to markets in North America.
- Create an American bio fibre industry that will be prepared to grow to meet the demand for biomaterials with a consistent quality fibre.
- Support research and development for bio-composites.
- Develop a major market for bio-insulation in the US.
Our Business Structure
Our General Partner, Earth Hemp Ltd., has established a Board of Directors to provide direction to the functions and activities of the Pilot Processing Facility. A Consortium Group made up of industry experts has been formed to act as an advisory committee to Earth Hemp Fiber LP. The Consortium Group brings expertise of fiber supply equipment, process, management, and market access to the Pilot Processing Facility.
The role of the Consortium Group is to provide advice and to support the development and operation of the Pilot Processing Plant and commercialization of industrial hemp processing in the US. Meanwhile, an individual may occupy more than one management function at EHF, with recruiting into the distinct areas of responsibility to support the growth of the company.
During the planning and construction phase of the Pilot Processing Plant, the Board of Directors, working with the qualified delegates of the Consortium Group, will recruit qualified individuals for these positions, providing key individuals with on-site training in operating European plants.
Production and administrative staff will be recruited during the construction phase of the Pilot Processing Plant. The management team for EHF and cursory overview of the key responsibilities for each position are described below.
- Chief Executive Officer
- Service and Production Supervisor
- Operations Manager
- Sales and Marketing Executive
- Company Cashier
- Production Supervisor
- Client Service Executive
5. Job Roles and Responsibilities
Chief Executive Officer
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counselling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
- In charge of providing direction for the business
- Creating, communicating, and implementing the plant’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall plant’s strategy.
- In charge of signing checks and documents on behalf of the company
- Evaluates the success of the plant
Service and Production Supervisor
- Serve as project manager of the plant; works directly with employees
- Develops strategic plan by studying new automobile technological, and financial opportunities; presenting assumptions; recommending objectives.
- Accomplishes subsidiary objectives by establishing plans, budgets, and results measurements; allocating resources; reviewing progress; making mid-course corrections.
- Coordinates efforts by establishing procurement, production, marketing, field, and technical services policies and practices; coordinating actions with corporate staff.
- Builds company image by collaborating with customers, government, community plants, and employees; enforcing ethical business practices.
- Maintains quality service by establishing and enforcing plant standards.
- Make certain that the service and production department perform efficiently, coordinate employee efforts, and facilitate communications between management and computer repairs and maintenance foremen and technicians
- Make sure the plant works in line with international best practices.
- In charge of overseeing the smooth running of HR and administrative tasks for the plant
- Defining job positions for recruitment and managing interviewing process
- Carrying out induction for new team members
- In charge of training, evaluation and assessment of employees
- In charge of arranging travel, meetings and appointments
- Oversee the smooth running of the daily office and factory activities.
Sales and Marketing Manager
- Manage external research and coordinate all the internal sources of information to retain the plants’ best customers and attract new ones
- Model demographic information and analyse the volumes of transactional data generated by customer
- Identifies development opportunities; follows up on development leads and contacts
- Writing winning proposal documents, negotiate fees and rates in line with plants’ policy
- In charge of handling business research, market surveys and feasibility studies for clients
- In charge of supervising implementation, advocate for the customer’s needs, and communicate with clients
- Create new markets cum businesses for the plant
- Empower and motivates the sales team to meet and surpass agreed target
- In charge of preparing financial reports, budgets, and financial statements for the plant
- Provides managements with financial analyses, development budgets, and accounting reports
- In charge of financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting for one or more properties.
- In charge of developing and managing financial systems and policies
- In charge of administering payrolls
- Ensuring compliance with taxation legislation
- Handles all financial transactions for the business
- Serves as internal auditor for the business
- Maintains work flow by monitoring steps of the process; setting processing variables; observing control points and equipment; monitoring personnel and resources; studying methods; implementing cost reductions; developing reporting procedures and systems; facilitating corrections to malfunctions within process control points; initiating and fostering a spirit of cooperation within and between departments.
- Completes processing plan by scheduling and assigning personnel; accomplishing work results; establishing priorities; monitoring progress; revising schedules; resolving problems; reporting results of the processing flow on shift production summaries.
- Maintains quality service by establishing and enforcing organization standards.
- Provides manufacturing information by compiling, initiating, sorting, and analysing production performance records and data; answering questions and responding to requests.
- Creates and revises systems and procedures by analysing operating practices, record-keeping systems, forms of control, and budgetary and personnel requirements; implementing change.
- Contributes to team effort by accomplishing related results as needed.
Client Service Executive
- Welcomes clients and potential clients by greeting them in person or on the telephone; answering or directing inquiries.
- Make sure s that all contacts with clients (e-mail, walk-In centre, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
- Serves as a sell attendant
- Manages administrative duties assigned by the creative director in an effective and timely manner
- Consistently stays abreast of any new information on the plants’ products, promotional campaigns etc. to Make sure accurate and helpful information is supplied to clients when they make enquiries
6. SWOT Analysis
We at Earth Hemp Fiber LP have conducted a SWOT analysis for our Business model in order to identify the weaknesses, strengths, opportunities and threats to identify negative factors and current gaps to ensure a smooth start-up phase of our business and develop a plan to address these to insure profitable growth of our plant. Below is a summary of the analysis undertaken to strengthen our company.
- Brand and Product Credibility
- Quality – we will guarantee all of our products, using innovative and highest quality equipment available.
- Customer Care – we always go the extra mile to ensure our customers are satisfied with the product and services provided.
- Experience – the sales, business and engineering experience of our management time and advisory board will prove a priceless weapon for us in this industry
Our weaknesses at EHF will be the lack of adequate funding to run and expand our business scope. But we have made adequate plans to raise funds to purchase equipment, plant expansion ,advertise, and hire employees.
Hemp fibers have been well known throughout much of history for its strength and durability in a variety of uses that include rope and high quality paper, canvases and textiles dating back several thousand years. Industrial hemp is gradually showcasing the potential to be a part of a growing trend towards developing “renewable” sources for industrial products currently sourced primarily from “non-renewable” sources. Presently, there is no commercial hemp fiber processing facility in the US to supply and grow these markets.
According to our SWOT analysis, our threats in this business would be the unfavorable government policies that affect the industry and all businesses in it. Hemp is mostly confused with marijuana, another cannabis plant, and this has greatly affected the acceptance of hemp products in our society.
7. MARKET ANALYSIS
- Market Trend
Internationally, the bio fibred processing industry is in the development stages. Commercialized industrial hemp processing is still foreign and limited in the world. Most hemp fiber for textiles comes from hand processing countries like China.
But, bio fiber processing technology is successfully operating in Asia and Europe, although in small scale. This technology decorticates and separates the plant material and processes the material into non-woven matting products, such as insulation. Meanwhile, European Union crop subsidies currently do not allow farmers to produce industrial hemp. It has resulted into an unreliable supply of hemp fiber.
Recently, as a result, flax has been the main fiber used for natural fiber insulation. Reports have it that the bio fiber or natural fiber area is also in its infancy, however, initial estimates buttresses that the natural fiber industry has a massive potential in the industry for structural and non-structural uses.
These innovative technology research and product developments require access to natural materials such as processed industrial hemp materials, and requires a reliable, consistent and sufficient supply. Automotive manufacturers are interested but require a uniform product that must meet specifications, just in time delivery, large volumes and available at a competitive price.
History has it that hemp and flax fiber insulation have been produced in Europe since the mid 1990’s, and have been in the market place in Europe for about twelve years. Hemp and flax fibers are made predominantly from cellulose or fiber.
Cellulose insulation, in the form of hammer milled paper, is well established in the North American market, and market acceptance has been growing. But the present cost for this bio fiber insulation product is approximately one and a half times that of mineral insulation products such as fiberglass.
8. Our Target Market
We at EHF Pilot Processing Plant plan to focus on the development of a business that processes Bio fiber insulation for the building material market and non-woven matting for various final products, such as the horticultural market. Our plant will also sell basic fiber to the paper and cardboard manufacturing/recycling industry as a way to enter the business.
All three markets were selected from an extensive list to allow for focused efficient and effective development of the market. Also, the production from our bio fiber Pilot Processing Plant is expected to represent a small percentage of the market potential of bio fiber products. As our production process is finalized, and product quality and features are proven in the market.
We at EHF will expand production capacities and capabilities with subsequent commercialized production facilities. We believe that the raw fiber for paper and cardboard recycling and hurds for animal bedding will generate significant cash flow for the company as well.
Our Pilot Processing Plant will increase rural infrastructure and rural sustainability through the introduction of an alternative, high value crop that can be produced in the majority of areas in the United States, where current cropping exists and rurally located processing facilities. Our products will surely provide several key benefits to the direct user as well as to the environment.
- Durable high strength source of industrial fibre.
- Fibre produced from an annual renewable resource that can replace synthetic fibres. Manufactured into bio-degradable products that can ultimately re-enter the environment without harmful effects.
- Hydro-electric/mechanical manufacturing process that does not use hydrocarbons for manufacturing or conversion of the product into finished goods and creates no waste by-products for disposal into the environment.
- Competitively priced commercial products for high quality fibre and insulation markets.
- Hemp bio fibre insulation is proven to have equal insulating effectiveness to that of fibre glass, and it is safe and easy to install. Natural fibres are not irritating to the skin, eyes or respiratory system. This is a benefit to many installers especially the do it yourself market. Conversely, installers of fibre glass insulation are at risk to ingest the fibre glass wool fibres through inhalation and skin contact.
9. SALES AND MARKETING STRATEGY
According to reports from our extensive research, the demand for insulation has been established and is growing as people upgrade older homes to be more energy efficient. Bio fiber insulation has been approved in Berlin for use in construction by the “Deutsche Institute fur Bautechnik” (German Institute for Constructional Engineering) under approval number Z 2311.
Once the product is commercial-ready and production levels are at commercial levels and sustainable, we at EHF will penetrate the building materials market through existing relationships, accessing national chains and buying groups.
We believe that the well connected network of building supply centers across North America is an oiled and efficient distribution network for bio fiber insulation. We also plan to leverage the knowledge of locally based Concrete Building Supplies to enter this market.
Concrete Building Supplies, an Illinois building supply retailer with ten outlets across the state has agreed to demonstrate the bio fiber insulation product. Merchants, a national building supply chain is also interested in the product, and is expected to concur to demonstrate the product after reviewing the technical testing report.
Also, prior arrangements have taken place with Vitality Equipment to use the insulation, when it becomes available, in a demonstration project. Although, no approvals are needed for the sale of the raw fiber or the non-woven matting products produced at EHF. Sales will be able to commence immediately upon start-up.
- Sources of Income
Our gross revenues at EHF include direct sales revenues from basic fiber and shives/hurds products, wholesaled to the paper and horse bedding industry, respectively, and revenues from basic horticultural mat line product which is sold as a finished bio fiber insulation product to building supply retailers. Also, the production from our bio fiber Pilot Processing Plant is expected to represent a small portion of the market potential of bio fiber products.
As our production process mature, and product quality and features are proven in the market growing the market demand, we at EHF will expand production capacities and capabilities with subsequent commercialized production facilities. We believe that the raw fiber for paper and cardboard recycling and hurds for animal bedding will generate significant cash flow for the company.
10. Sales Forecast
Earth Hemp Fiber LP is projected to achieve $2.97 million in revenue in 2021, the first 11 months of pilot operations, rising to $8.73 million by the end of 2023. Major direct costs include raw hemp material. Gross margins are relatively stable during the first three years of the processing project, projected at 48 percent in 2021, 49 percent in 2022, and 47 percent in 2023.
The most significant expense categories are marketing, amortization of property and equipment and salaries, wages and benefits representing approximately 69 percent of overall expenses in 2021, and approximately 76 percent in 2022 and 75 percent in 2023.
Based on a gross margin of 46 percent, we expect to achieve break-even with approximately $6.8 million revenues in 2023, or at approximately 79 percent of 2023 projected revenues. Profit margins from operations improve from negative 40 percent in 2021 to negative 15 percent in 2022, improving to positive 11 percent in 2023.
Notably, it reflects a net loss from operations of nearly approximately $952,000 in 2021, improving to net earnings of over $843,000 by 2022. Net earnings, including income from grants and payment of interest on long-term debt, improve from a loss of $621,089 in 2021, to positive earnings of over $230,000 in 2022, further improving to over $586,000 in 2023.
11. Our Pricing Strategy
Note that fiberglass insulation is sold in the United States for $95 per cubic meter. At an average density of 13.6 kg/m3, it sells for $3,400 /tones. However, it is hard to determine the exact price points for bio fiber hemp insulation. In Europe, the retail price of bio fiber insulation has changed from initially four times the cost of fiberglass to 1.6 times the cost.
Meanwhile, the matting machine specified for EHF Pilot Processing Plant will produce a complete range of non-woven matting. Our price for these fiber demand range from $360-$2,400/tones US, but depends greatly on product and quality.
Based on current estimates, we at EHF expect to wholesale bio fiber insulation for $2,200 per metric tone. The same process and non-woven matting product is used for horticultural products, therefore we expects to wholesale this material at $2,200 per metric tone also. While fiber and shives wholesaled to the paper manufacturing/recycling industry will be sold at $400 per metric ton.
- Payment by via bank transfer
- Payment via online bank transfer
- Payment via mobile money
EHF has partnered with a renowned bank in the country and hopes to ensure good financial relationship.
12. Startup Expenditure (Budget)
Our total capital requirements at EHF shown in this plan are approximately $18,200,550, and include fixed capital requirements and capitalized startup costs. Capital requirements associated with fixed capital include the construction of the Pilot Processing Plant, and fiber processing and matting equipment.
We are currently in discussion to purchase land from the state of Illinois in which the Earth Hemp Fiber LP Pilot Processing Plant will be situated. The discussions include purchasing the land for approximately $1,200,000 with an incentive provided by the State that will give EHF approximately $1,200,000. No definitive agreement has been made.
- Pilot Processing Plant Building: $4,742,137
- Fibre Processing Equipment: $6,374,028
- Matting Equipment: $5,634,367
- Startup cost: $1,449,968
From the simple breakdown above, our Total Capital Requirement at EHF, including startup cost is $18,200,550. Costs associated with the start of business operations are estimated at $1,449,968 and have been capitalized, amortized at 9 percent per year.
These capitalized start-up costs include $350,000 for research and development costs invested by EHFPC Ltd. associated with the development of the project, and $300,000 in organization costs that include general start up costs. We believe that these startup costs will be realized prior to full production of the Pilot Processing Plant.
- Generating Funding/Startup Capital for EHF
The capital requirements for Earth Hemp Fiber LP. are projected at approximately $18 million, and include the construction of our 48,000 metric tones Pilot Processing Plant and the purchase and reengineering and modification of equipment from Asia and Europe.
Our start-up requirements are projected at approximately $2.2 million, and include initial inventory requirements and general startup expenses. Financing requirements are expected to be funded through a $3.5 million flexible loan from the state of Illinois and traditional financing of nearly $9 million. The remaining $6.5 million is to be raised in 2021 through an offering of Earth Hemp Fiber LP (EHF) units on the financial market.
The modification and reengineering of the equipment and the construction of the plant is expected to require approximately 11 months, followed by two full years of limited production during the pilot testing of the processing and products.
Total financing needed to fund the purchase of capital assets, development costs and start up expenses at EHF is $18,200,550. Long-term debt of $12,00,000 will be sought to finance capital requirements associated with the construction and purchase of the plant and equipment. Financing will be sought through a $3.5 million flexible loan from the state of Illinois at an interest rate of 5.5 percent, amortized over 10 years.
Traditional financing of $9,500,000 will be sought to finance capital associated with the construction of the plant and purchase of processing equipment. Negotiations are underway with traditional financers. $3,000,000 will be used to finance the building construction at an interest rate of 7.50 percent with an amortization of 20 years.
$4,000,550 will be used to finance the equipment costs, with an interest rate of 6.25 percent and an amortization period of 10 years. We at EHF also plan to raise $6,500,000 in additional financing through an equity offering of Earth Hemp Fiber LP units.
The additional equity financing obtained from the Offering will be used to finance the balance of the capital costs and costs associated with the start of operations, including the purchase of initial inventory requirements. The equity raised by the Offering will be in the form of $2,000,000 of raw hemp fiber provided by EHFPC Ltd. and $4,200,000 from cash.
13. Sustainability and Expansion Strategy
At the end of our pilot phase, we expect the technology to be ready for commercial scale production, and market demand for hemp bio fiber products will have been properly expatiated. We hope to ensure the commercial model also use the same zero-waste process operating on hydro-electric power and have a production capacity of 48,000 metric tones of raw fiber annually.
Our current estimates projects construction of one commercial processing facility every two years over a ten year period. In 10 years, we believe this bio fiber processing model could cumulatively sequester approximately 466 kilotons of carbon or about 86 kilotons per year.
These bio fiber processing plants can be replicated anywhere in North America where hemp and most other crops can grow. Note that hemp is adapted to a wide range of soil types and climates so most areas of the United States can easily enter the production chain.
Our forecast of new construction is based on a slow growth of the natural fiber uses, biofibre insulation and biofibre/biomaterials industries. Research in North America and internationally is ongoing to develop processes and polymers suitable to utilize agriculture fibers as a replacement for glass fibers such as those found in fiberglass insulation.
But, there is little work being done on fiber production and processing. We at EHF plan to offer the platform for development of bio fiber suitable for product research requirements, while sustaining itself financially with sales of raw fiber and non-woven matting products, such as bio fiber insulation.
- Business Name Availability Check: Completed
- Business Incorporation: Completed
- Opening of Corporate Bank Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Conducting Feasibility Studies: Completed
- Leasing, renovating and equipping our facility: Completed
- Generating part of the startup capital from the founder: Completed
- Applications for Loan from our Bankers: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Promotional Materials: Completed
- Recruitment of employees: In Progress
- Purchase of the Needed software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business (Business PR): In Progress
- Health and Safety and Fire Safety Arrangement: In Progress
- Establishing business relationship with banks, financial lending institutions, vendors and key players in the industry: In Progress