Got a business in California? You might benefit from a business loan. You could use business loans in California to buy office space, invest in marketing, open another location, hire staff, or anything else that helps your business grow.
We’ll look at where you can find business loans in California as well as a few other small business resources you’ll want to know about.
7 Types of Business Financing Available in California
Let's start by going over a few types of financing you can apply for in California. Each has its benefits and drawbacks.
1. SBA Loans
These loans are guaranteed by the Small Business Association, and are offered by banks, credit unions, and other lenders. Generally, SBA loans have the lowest interest rates possible and longer repayment terms, up to 25 years.
There are several SBA loan programs, including:
- 7(a)
- 504
- Microloan
You could use SBA loans for many purposes, including working capital, real estate, equipment, staff, marketing, and more.
To qualify, your business must meet the SBA's criteria for small businesses and have exhausted other financing options. Just a note: SBA loan applications could take anywhere from 30 to 90 days to process, so plan to apply long before you need the funds.
2. Traditional Loans
Banks and credit unions offer conventional or traditional business loans, often with competitive rates and terms. You’ll need a strong application to qualify, such as a solid business credit history and/or higher personal credit score, a good financial track record for your business, a good financial forecast, and so on. You could use traditional loans for the same business purposes as an SBA loan.
U.S. Bank is an example of a traditional bank that offers business loans to California (and other) companies.
3. Online-Only Lenders
Many lenders today don't have physical locations but offer loans with fast approval and easier requirements.
If you don't qualify for traditional bank loans, check out online-only lenders like Funding Circle, Kapitus, or OnDeck. The benefit to working with online-only lenders is that loan applications tend to be processed quickly, if not instantly. Some loans are approved, closed, and funded within one business day.
4. Microloans
Microloans come in smaller amounts (typically up to $50,000). They’re ideal for startups and small businesses that only need a little capital.
Microloans can be easier to qualify for, but they usually need to be paid back in a matter of months, not years.
5. Equipment Financing
Consider this financing option if you're purchasing equipment or machinery. The interest rates may be low because the loan is secured (guaranteed) by the business equipment you're purchasing.
Both Flexibility Capital and Samson Financing offer equipment financing.
6. Business Credit Cards
While not a loan, a business credit card could be helpful when you need to make purchases but don't have the funds in your bank account. American Express offers a business card with several benefits to business owners.
7. Lines of Credit
A line of credit gives you flexibility to access cash when you need it. Pay back what you borrow, and you could borrow from the revolving credit again and again.
If a line of credit is a good fit, check out U.S. Bank's offerings.
Local and State-Specific Business Loans in California
Now let's look at some California-specific loan programs.
California Infrastructure and Economic Development Bank (IBank)
The California Small Business Loan Match connects small businesses with lenders throughout California, many of which are Community Development Financial Institutions (CDFIs). CDFIs are mission-driven financial institutions that provide financial services to underserved communities and individuals. CDFIs can be banks, credit unions, loan funds, or venture capital funds.
Jump Start Microloan by iBank
iBank offers microloans of $500 to $10,000 to small businesses in low-wealth communities. In addition, the program provides technical assistance and financial literacy.
Accessity
Accessity provides low-interest loans and other business resources to entrepreneurs of color, women, and immigrant entrepreneurs who live and work in Southern California.
Working Solutions
This San Francisco-based lender offers three- or five-year loans of $5,000 to $100,000 to California businesses.
Industry-Specific Loans
California has several industry-specific loan programs, including:
- California Pollution Control Financing Authority (CPCFA): Loan programs for California small businesses, including special programs for underserved communities and business owners.
- GoGreen Business Energy Financing: Loans for buying energy-efficient appliances and equipment, or for making energy-efficient upgrades.
- Brownfields Revolving Loan Fund Program: Loans to clean up and develop brownfield sites. Brownfields are abandoned, under-used, or idle, and potentially contaminated.
California Small Business Resources
In addition to business loans in California, you may also benefit from these small business programs and resources. Many of them offer free advice, workshops, training, and mentorship.
Small Business Development Centers (SBDCs)
You'll find SBDC centers throughout California. Each offers technical help in several areas, from business planning to financial management. An SBDC could connect you with funding opportunities and help you prepare your loan application.
California Community Development Financial Institutions (CDFIs)
CDFIs are nonprofit organizations that provide loans and other services to underserved communities. California has several, including Pacific Community Ventures and Opportunity Fund.
California Office of the Small Business Advocate (CalOSBA)
CalOSBA provides consulting and training to California small businesses, startups, and nonprofits. It could help with setting up a business, finding grant and financing opportunities, and applying for permits.
California Small Business Grants
Grants are a great alternative to business loans. The great thing about grants is that they don’t have to be repaid. However, there’s usually steep competition for the free cash.
Here are some grants available to California businesses, as well as some that aren’t specific to California:
- California Small Agricultural Business Drought and Flood Relief Grant Program (CDFRG)
- California Community Reinvestment Grants Program
- Dairy Digester Research and Development Program
- California Investment and Innovation Fund (Cal IIP) Program
- Environmental Sustainability of a Clean Energy Transition (Enviro-SET)
- HerRise Microgrant
- The Amplifier Grant
What’s the Application Process Like for Business Loans in California?
Once you're ready to apply for a California business loan, here's what you'll need to do.
First, Choose the Right Lender
It's important to find a lender with the products and services that best fit your business needs. That doesn't just mean finding the lender with the lowest rates. You'll also want to look at loan terms, approval speed, and customer service. Read online reviews, positive and negative, to understand what a company is like to work with.
You may want to get preapproved with a few lenders so you can compare offers.
Next, Gather Your Documents
The lender will let you know what they need. That likely will include financial statements and tax returns. You may also be asked for a business plan, articles of incorporation, or other legal paperwork.
Last, Submit Your Application
The lender's website typically indicates how long it will take to review your application. Approval could be instant, or it could take a couple of weeks. Processing tends to be faster and simpler for smaller loans. Once your loan is approved and you sign closing documents, the lender will probably electronically transfer the funds to your bank account. That could happen the day after approval, or it could take months. It depends on the loan program.
California offers a wealth of resources for small businesses, including many financing options. There are also great free resources that could provide training, mentorship, and networking opportunities. Explore them all to discover the best fit for your business.
