california

California Small Business Loans

Starting your own small business can be both thrilling and terrifying. The most significant factor preventing entrepreneurs from starting and running a small business is the financial investment needed. This is particularly true if your business is new or isn't yet generating its expected revenue. We'll look at the various California small business loans available in this guide.

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

Institution

Type of Loans

Amounts granted

Term

Interest Rates

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

8%,


5%-7.75%,



8.5%

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

1. California Small Business Loan Guarantee Program

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. 

2. Valley Economic Development Center Small Business Loans

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.

3. Housing Authority/ LA Community Development Commission SMART Funding Program

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.

4. Accion Rapid Loans

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.

5. California Capital Access Program for Small Business

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. 

Top Online California Small Business Loan Options 

You should also consider online business loans alongside your other loan options. These are some of the options available to California small businesses. 

1. BlueVine

BlueVine provides invoice factoring to assist you in paying for immediate expenses such as manufacturing costs. Its online application process takes just 10 minutes to complete. In terms of the relationship, BlueVine provides a long-term solution. Once you've been accepted as a borrower, your profile will remain active, and you'll be able to request funding quickly by simply providing the invoices you need to bridge.

BlueVine Pros

  • Speedy online applications
  • Receive answers within 24 hours
  • No surety needed
  • You can receive 85% - 90% of invoice value upfront.
  • Your credit score does not affect it negatively.
  • You can borrow up to $5,000,000.

2. Fundera

Fundera specializes in the systems required to manage the revenue and expenses of your company. Accounting software, payment systems, and loans are all included. It works with a variety of financial services to provide you with a one-stop-shop for financial assistance. You'll be able to choose from a variety of preferential rates based on your loan requirements, thanks to the variety on offer.

Fundera Pros

  • Best rates for business loans
  • Various lenders available
  • Financial services and advice
  • Multiple integrations.

3. Fundbox

Fundbox offers two different types of loans. It provides all company owners with a line of credit. Clients who have been with the company for a long time are eligible for term loans. You can apply online and receive up to $150,000 right away. The lending process is simple and straightforward, with excellent customer service.

Fundbox Pros

  • Fast online application
  • Accepts lower credit scores
  • Receive up to $150,000 in pre-approved credit
  • Re-apply for new credit effortlessly

Additional California Small Business Financial Resources

Aside from the commercial loan programs and online lenders mentioned above, California has other financial resources, such as government offers or small business grants.

1. Business Lines of Credit

A business line of credit is a good option if you need flexible small business financing in California. This funding option, which isn't technically a loan, provides you with only the funds you need when you need them.

You can then withdraw the amount you need after receiving approval for a set limit. You'll just pay interest on the money you take out, and as you pay it off, you'll be able to take out more. The SBA has programs all over the country, but many of them are suitable for California small business loans. However, before applying, double-check that your company meets the eligibility criteria. 

2. Equipment Financing

Instead of looking into California business loans to purchase new equipment, you may be eligible for equipment finance. This type of finance allows you to buy rather than rent new equipment. It's available in almost every industry, and there are no upfront costs. In addition to purchasing new equipment, you can deduct the equipment’s entire cost in the first year. 

3. California SBA Loans

The SBA has programs all over the country, but many of them are suitable for California business loans. However, before applying, double-check that your company meets the eligibility criteria. Consider SBA disaster loans if you need money to get back on your feet after a natural disaster.

It's also a valuable tool to have on hand if you're preparing your company for a downturn.

Other Resources for California Small Businesses

California also has non-financial resources to help you along the way, such as coaching, guides, and networking. Here are examples of a few of them.

General Resources

News and Media Resources

  • The 100 Most Underrated Small Business Blogs​ is a comprehensive list of business blogs that focus on small businesses. This list compiles original and vital content.
  • Inc.com is an online magazine for entrepreneurs and small business owners.
  • The Wall Street Journal offers advice on starting a business as well as databases of for-sale companies and venture capital. 
  • Entrepreneur.com is a magazine with ideas, articles, and resources for starting a business.
  • About Business is a comprehensive site with articles written by experts in their respective fields, including business practices, general business, industry-specific information, and small business.

How to Prepare for a California Small Business Loan

There are a few small business loan requirements in California that you'll need to get ready to include in your application. The paperwork requirements vary widely depending on the loan or grant you apply for, but there are a few things to bear in mind:

Business Plan

It is vital to have a business plan. A comprehensive description of the company's product or service, potential client base, local and national rivals, and financial forecasts are also included in the business plan. Sponsors and grant agencies will use your marketing strategy to measure your company's projected growth opportunities and the amount of financing you're eligible for.

Credit Score

Your credit score can play a role in your ability to obtain a business loan. Your credit score is critical to banks, and many charities check at a company owner's credit background. Track your credit score daily, correct any mistakes on your credit report, and pay off all existing loans on schedule to boost and maintain your credit.

Business Revenues

When you're just getting started, have the aim of rising sales in mind. Lenders are most likely to lend money to firms with a marketable product and a large consumer base. The faster you reach that status, the better. You'll have access to more capital. Although startup business loans are available, obtaining a loan for an existing revenue-generating business is more straightforward.

The Bottom Line

Now that you're done reading our guide to small business loans in California, it's time to make the next move. Small business loan opportunities in California are outstanding. On the other hand, much of them would necessitate a robust underwriting procedure and the qualifications to survive such scrutiny.

For those that aren't quite eligible, online business loans that finance California small companies are a viable choice. However, looking for local funds and funding online are not mutually exclusive. You should consider your options from national, statewide, and local sources before deciding which is best for your business.