Small Business Loans in California

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    California Business Loans for California-Based SMEs

    California is home to more than 4.1 million small businesses in America, which employs 50% of the state’s workforce. In 2019 alone, the Golden State generated a GDP of more than $3 trillion, one of the highest in the world. The state also contributes 14% to the United States economy. 

    The signing of Senate Bill 1235 into California Law has made the state one of the best to get business financing. As per the bill, small business lenders are required to provide “consistent disclosures to small business owners when they offer them financing and when they close a deal.” With it, you as a business owner will know exactly what kind of deal you’re getting into. 

    Additionally, multiple local and government entities offer California Business Loans. These two perks make the state one of the best places to start and grow your business. 

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    Agricultural Business Loans in California

    When it comes to agriculture, California grows more than 400 different crops and distributes its produce throughout the country and the rest of the world. In fact, two-thirds of the country’s fruits and nuts come from the Golden State. In the United States, California is one of the biggest sources of produce like grapes, strawberries, dairy products, lettuce, and almonds. 

    As the demand for fresh produce continues to rise, farmers and other agricultural sectors must ensure that they have enough in store to satisfy the consumers' needs. Small business loans in California help local farmers secure sufficient funding to support the growth and expansion of their businesses. 

    Manufacturing and Technology Loans in California

    Whether you’re in San Bernardino, Southern California, San Diego, or Bay Area counties, the Golden State is among the most forward-thinking states in the United States. Most of their manufacturing industries are technology-intensive and involve mainly electronic computer manufacturing, software development, and high-tech computer and electronic manufacturing. Small businesses operating in the industry must be prepared for the high costs. 

    Manufacturing and technology loans can give business owners the capital to cover their business investments. Aside from the materials, they can use the loan’s proceeds towards purchasing equipment, warehouse construction, research costs, shipping and logistics, and others. 

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    Construction Business Loans in California

    construction business loans in california

    California is also home to the six biggest construction companies in the United States. Tutor Perini in Sylmar, California, generates around $6.6 billion and Aecom in Los Angeles generates around $6.5 billion in revenue. It’s safe to say that the construction industry remains the largest contributor to the California economy.  

    The best construction loans can give California construction companies access to the best materials and equipment they need for their projects. Aside from that, these small businesses are prone to cash flow gaps as construction clients usually take 30 to 90 days to settle their bills. With California small business loans for contractors, they can bridge the gap and avoid cash flow issues in the future. 

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    Best California Small Business Lender Options

    As mentioned, California is one of the best states in the nation to do business. Business owners can find a lot of financing institutions that offer affordable funding to small businesses. We’ll outline some of them below:


    1.   California Small Business Loan Guarantee Program

    The California Small Business Loan Guarantee Program is a loan program of the Small Business Financing Center of the California state government. The state partners with Financial Development Corporations (FDC), which extends the credit to small business owners. With the program, small businesses can get between 80% to 95% guarantees on the affordable loans offered by the FDC lenders. 


    Qualified borrowers can get loan amounts up to $20 million. But it’s worth noting that the guaranteed portion can only go up to a maximum of $2.5 million. The interest rates will vary by lender and your qualifications (i.e., credit score, business strength, etc.). Depending on the financing institution, the repayment terms can be at least seven years or longer. 


    Your small business must be located within California to be eligible for the California Small Business Loan Guarantee Program. The FDC lenders may also have their own requirements small business owners must meet to qualify for the program. Be sure to ask what they are before submitting your loan application.


    2.        Accion Rapid Loans

    As the name implies, Accion Rapid Loans provides small businesses with quick access to small business financing. Once approved, you’ll be able to access the funds within three days. However, the loan amounts associated with the business loan are significantly lower compared to typical business loan options. In general, you’ll receive around $300 to $8,000 in funding with an interest rate of 14% to 18%. 


    Applying for Accion Rapid Loans is also relatively easy. Their required documents are usually limited to valid IDs, business licenses, proof of address, and at least one year-worth of business tax returns. 


    Accion Rapid Loans also work with small businesses with credit scores as low as 550. Those who lack credit history and have a poor personal credit score can apply for a loan. But expect the interest rates to be much higher. 


    3.        Opportunity Fund

    Opportunity Fund is one of the largest non-profit lenders in the United States. Although it just started offering affordable business loans to other states, it maintains its roots in California. That said, most funding options are only available to small business owners in the state. 


    Once approved, businesses can get anywhere from $30,000 to $250,000 in funding, which they must repay within five years. The APR for the financing can be as low as 9.6%. 


    To be eligible for the business loan, you need at least one year of business history, a credit history of on-time payments, and those with limited credit background. 


    4.        Wells Fargo SBA Loans

    Wells Fargo is a preferred SBA lender and is one of the top performing banks in business lending. In 2018, the banks approved approximately 1,200 Small Business Administration (SBA) loans in the country. Within that fiscal year, Wells Fargo lent an average of $420,336 to small business owners with an average interest rate of 7.7%. 


    However, Wells Fargo’s affordable SBA loan options have a particular downside. To qualify, the Small Business Administration requires that you show lenders you have at least two years of business history, a stellar credit score (a minimum credit score of at least 650 or better), and solid business revenue. Anything short than that hurts your chances of approval. 

    State Loan Programs Specific for California Businesses

    The government of California is committed to supporting small businesses by ensuring they have access to affordable financing options, especially now as California based businesses are feeling the effects of the pandemic. 

    Here are a few state loan programs that were created to help your small business afloat during these trying times:

    1.   Disaster Relief Loan Guarantees

    The California Infrastructure and Economic Development Bank’s (IBank) Small Business Finance Center manages the Disaster Relief Loan Guarantee Program. They created this program to provide financial assistance to small business owners that suffered economic repercussions due to the Covid-19 pandemic, especially those who aren’t eligible for federal disaster funds, immigrants, and underserved communities. 

    Use of Funds: You can use the additional capital to pay for day-to-day expenses or restore the economic turmoil due to the pandemic.  


    How to Qualify: California based businesses with 1 to 750 employees that have been negatively affected by the pandemic can qualify for the Disaster Relief Guarantee. The government guarantees up to 95% of the loan for seven years. The lender usually sets the qualifications, but you can negotiate the interest rates once your loan is approved. 


    You can apply for the Disaster Relief Loan Guarantee Program at

    2.        California Capital Access Program (CalCAP)

    The California Pollution Control Financing Agency in the California State Treasurer’s Office created the California Capital Access Program for Small Business (CalCAP SB). The program aims to encourage banks and other financial institutions to extend financing to small businesses that have a hard time securing extra capital. 


    Lenders may provide more favorable terms and rates if your loan is enrolled in the CalCAP Loan Loss Reserve Program. One of the goals is to help local communities by financing companies that can create more jobs and ultimately improve the economy. 


    Use of Funds: You can use the money for day-to-day expenses, expansion, working capital, and more. 


    How It Works: The CalCAP is a loan loss reserve program that can provide lenders 100% loan coverage if the borrower defaults on the loan. This incentivizes lenders to approve small business loan applications. Learn more about the program here:

    State Loan Programs Specific for California Businesses

    Most small businesses use the funds for the following expenses:

    • Cover seasonal cash flow gaps
    • Purchase equipment
    • Acquire commercial land
    • Fund commercial building construction
    • Cover staff payroll
    • Inventory reordering
    • Business acquisition
    • Improve cash flow
    • Create a safety net for emergencies
    • Refinancing existing debts
    • Real estate acquisition
    • Marketing and advertising expenses


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