Small Business

A comprehensive guide to securing a business loan in California

Getting a business loan can be complicated, but the process may be easier for business owners in California. That’s because the Golden State has a history of encouraging and supporting small business growth. There are numerous financing opportunities for business owners who need extra capital, including specific California business loans and California small business grants.

According to a 2019 profile from the U.S. Small Business Administration (SBA) Office of Advocacy, small businesses make up 99.8% of all California businesses. And in 2017, lenders issued nearly one million California business loans to small businesses for amounts under $100,000.

Plus, California has higher standards for lending practices than most other states. The state recently signed Senate Bill 1235, which requires lenders and other financial institutions to abide by certain transparency regulations when when offering financing to small businesses. As a result, California business owners have more information and legal protection when exploring their financing options.

If you’re considering a loan to help grow your business, here are 10 good options for business loans in California.

Top California small business loans

1. California Small Business Loan Guarantee Program

Through the California Small Business Loan Guarantee Program, the Small Business Finance Center (SBFC) partners with different financial development corporations to give capital to small businesses for a variety of needs. Any California-based business with one to 750 employees is eligible to apply. Loan amounts can go up to $20 million, and the SBFC guarantees 80% to 95% of the loan.

For less established businesses wondering how to get a small business loan in California, there’s a Jump Start Loan Program, which offers up to $10,000 to businesses in underserved communities.

2. Valley Economic Development Center

The VEDC is a non-profit community development financial institution (CDFI) that gives loans to businesses based in California and New York. With the standard California  small business loan, you can borrow $50,000 to $500,000 for expansion, debt refinancing, working capital, or equipment needs. The VEDC also has a microloan that lends up to $50,000 to shop owners for inventory or debt refinancing. Fixed and variable interest rates start at 7.75%.

3. California Capital Access Program for Small Business

The California Capital Access Program for Small Business, also known as CalCAP, is a loan loss reserve program that can cover up to 100% of certain business loans from California lenders. The program was designed to motivate banks and financial institutions to lend money to small businesses that have struggled with financing in the past.

To apply for a California small business loan through the program, your primary business must be located in California, as well as at least 51% of your employees or income. If you qualify, you can use your loan for start-up costs, working capital, refinancing, inventory, equipment, or real estate purchases. However, the funds you spend have to go toward projects created and maintained in California.

California business loans by area

4. Working Solutions

Working Solutions is a CDFI that lends to both startups and established businesses in the nine San Francisco and Bay Area counties. If you qualify for a California business loan with them, you can borrow anywhere from $5,000 to $50,000 for up to five years with interest rates between 9% and 11%. There’s no minimum credit score, minimum revenue, or collateral required to apply.

5. San Diego Commercial and Business Financing

San Diego Commercial and Business Financing (SDCBF) focuses primarily on commercial real estate financing, but they also offer a few different loan options for small business owners. In addition to business lines of credit and accounts receivable loans, SDCBF also offers SBA 504(b) and 7(a) loans. Though most businesses use the loans to purchase real estate, you can also put the funds toward business acquisition, equipment, or furniture.

6. Heritage Bank of Commerce

Based in Northern California, Heritage Bank of Commerce is a local bank that serves small businesses located in and around San Jose. Their loan products for businesses include credit cards, lines of credit, and term loans — for everything from short-term financing needs to long-term growth projects like expansion, company acquisition, or building renovations.

7. Los Angeles County Development Authority

The Los Angeles County Development Authority has a handful of loan programs designed to support businesses in LA County. Their SMART Funding program lends to businesses involved in one of the following industries: manufacturing, clean technology, health and medical, or transportation development. If your business qualifies for SMART Funding, you can use the money for a variety of needs, including refinancing, real estate acquisition, inventory, working capital, equipment, and job creation.

8. Accion Rapid Loan

Accion, a nationwide nonprofit lending network, helps support small businesses across the country. Their Accion Rapid Loan, however, is only available to small business owners who live and operate in one of four Southern California counties: Imperial, Riverside, San Bernardino, or San Diego.

Loan amounts range from $300 to $8,000 with terms of up to 36 months and interest rates between 14% and 18%. You can use the money to help with start-up costs, marketing, or hiring, or to buy equipment, vehicles, or inventory. Plus, true to its name, the loan process is fast — you can get approved in just three days.

9. Los Angeles Federal Credit Union

The Los Angeles Federal Credit Union (LAFCU) gives loans to businesses that need capital for expansion, advertising, equipment, inventory, and more. Loans range from $20,000 to $5 million and have no prepayment penalties. However, you need to be a member of the LAFCU to apply for a business loan, which means you need to live in the greater LA area or work for the city of LA to qualify.

10. PACE Finance Corporation

PACE Finance Corporation, a CDFI, offers loans to small business owners throughout Los Angeles in an effort to help create and sustain jobs in lower income communities. Their small business loans range from $500 to $250,000, but they also offer SBA microloans and mini microloans for business owners who haven’t yet built up business credit.

California small business grants

State and local government organizations in California occasionally offer grants to small businesses. The Capital Infusion Program, for example, which is run by the California Governor’s Office of Business and Economic Development, provides grant funding to the California Small Business Development Center Network.

To find other California-specific grants, visit the Economic Development Administration website to explore the resources available within state agencies. You can also check USA.gov to search for funding opportunities in California.

Consider an online lender

If you’re having a difficult time finding a California-specific business loan, consider applying for a loan with an alternative lender. Online lending platforms typically offer businesses more flexibility when it comes to loan type and terms.

At Funding Circle, for example, businesses can borrow $25,000 to $500,000 for up to five years with interest rates starting at 4.99%. Plus, you can get a decision in as little as 24 hours after applying. These are just a few of the California business owners who’ve used a Funding Circle loan to grow their operations:

  1. Just Jan’s
  2. Kate Lester Interiors
  3. Philosophie Group
  4. Koshland Pharm Custom Compounding Pharmacy
  5. Virtual Driver Interactive
  6. Maika Goods
  7. Besame Cosmetics
  8. Mid-Valley Veterinary Hospital
  9. Peak Design
  10. Solé Bicycle Company

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