|At a glance — California is home to the highest number of small business enterprises, in comparison to the other American states, boasting 4.1 Million businesses. It is no wonder that so many lenders, both locally and online, are available to help businesses start-up and grow. The state’s average small business loan interest rate is between 3%and 7%, depending on the loan institution. California is the best state to get a business loan in, and our article will explain why. |
Quick Overview of the Best California Small Business Loans
Type of Loans
California Small Business Loan Guarantee Program
Loans and Guarantee Scheme
80% -95% up to $2.5 Million Guarantees. Up to $20 Million loans
Average of seven years
Depends on institution
Valley Economic Development Center Small Business Loans
Standard business loans, microenterprise loans, and VEDC microloans
$50,000 to $500,000,
$2,500 to $50,000,
$500 to $2,500
Six months to five years
Housing Authority SMART Funding Program/LA Community Development Commission
Small and Medium business loans
$25,000 to $1.5 Million
It depends on the loan amount
It depends on the loan term
Accion Rapid Loans
Small business loans
$300 to $8,000
Up to three years
14% - 18%
California Capital Access Program for Small Business
Credit loss reserve program and small business loans
Up to $5 Million
Minimum of three years
Depends on the lender
Top Five California Small Business Loan Options Explained
The Small Business Finance Center of the California state government manages this small business loan guarantee scheme in collaboration with seven Financial Development Corporations. The Small Business Finance Center grants 80% to 95% of FDCs' small business loans directly through the California Small Business Loan Guarantee Scheme.
You must own and manage a small company in California from one to 750 employees to be eligible for the guarantee scheme. Small business loans of up to $20 million are available, but only with guarantees of up to $2.5 million. These loans would have a median maturity period of seven years, but they may be longer. The interest rate you pay can vary depending on which direct lender you use to finance your loan.
Standard business loans, microenterprise loans and VEDC microloans are the three types of VEDC small business loans available. The standard loan from the VEDC varies from $50,000 to $500,000, with maturity periods going from six months to five years, interest rates as low as 8%, and origination fees ranging from 2% to 3%.
VEDC microloans are smaller, varying from $2,500 to $50,000, with maturity periods ranging from six months to five years, interest rates ranging from 7.75% to 5%, and origination fees ranging from 3% to 5%. The VEDC's smallest loan option is microenterprise loans: Loan amounts vary from $500 to $2,500, with maturity periods running from six months to two years, interest rates as low as 8.5%, with origination costs ranging from $25 to $50.
The SMART Funding program is administered by the Los Angeles County Community Development Commission/Housing Authority, which provides affordable business loans to existing small and medium businesses.
Small companies in the engineering, medical, and transportation growth industries can apply for SMART Financing business loans, ranging from $25,000 to $1.5 million. These small business loans may be used for many things, including real estate acquisitions, product purchases, operating capital, infrastructure purchases, leasehold renovations, job creation, workforce retention, and even debt refinancing.
Small business loans ranging from $300 to $8,000 are available from Accion Rapid Loans, with repayment periods of up to three years and set introductory interest rates of 14% to 18%. Veterans, active-duty service personnel, and wives will also get a 1% discount.
This small business loan for California-based companies is named "rapid" for a reason: approval will arrive in as little as three days. To register, what you'll need is registration, proof of address, a business license, and a year's worth of business tax returns. For this small business loan opportunity, you must have a minimum credit score of 550.
CalCAP (California Capital Access Program for Small Business) is a credit loss reserve program covering up to 100% of small business loans made by eligible California small business lenders. Small business loans of up to $5 million are available from lenders. Specific borrowers would be limited to $2.5 million in enrolled capital over three years under the initiative.
To be considered for the CalCAP scheme, your primary company must be located in California, as must at least 51 percent of your workers, business profits, revenue, or payroll. You can use this loan for several reasons, including operating capital, infrastructure acquisitions, product purchases, and even startup costs.