Expert Advice on Small Business Loans in California
California has nearly 4 million small businesses within its borders. The Golden State depends on these companies to improve its economy. As a small business owner in the state, obtaining working capital can be beneficial for your business. With sufficient cash, you can pay bills and other business expenses.
The loans could be used to meet your various needs including purchasing supplies and purchasing real estate to grow your business. This guide offers in-depth details about the various California small business loans.
Accion Quick Loans
Although Accion offers small business loans nationwide, its quick loans are only available to small businesses in California. Especially those in San Bernardino, San Diego, Riverside and Imperial counties.
Businesses in these counties can access loans of $ 300 to $ 8,000 with a three-year repayment plan. First, interest rates are set at 14% to 18% with an additional 1% discount for veterans, active duty service personnel and their spouses.
Quick loans are available three days after approval. Some of the requirements for applying for Accion fast loan include:
- Business income tax returns for the previous year
- Work address
- Proof of address
- At least 550 credit score
Small Business Loan Guarantee Program
The California government is partnering with various Financial Development Corporations (FDCs) to provide small businesses with access to the loan guarantee program. The program grants 80 to 95% of loans to small businesses in the FDCs.
Entrepreneurs eligible for assistance under this program must operate a small business in California with a maximum of 750 employees. Small business loans are available up to $ 20 million, although the guaranteed maximum is $ 2.5 million. The average maturity of these loans is at least seven years. Finally, depending on the direct lender offering you the loan, the interest rate may differ.
VEDC (Center for Economic Development of the Valley)
This non-profit organization offers three types of small business loans. Standard business loans can range from $ 50,000 to $ 500,000 with a repayment period of six months to five years. Usually there is an original charge of 2% to 3% with a minimum interest rate of 8%.
VEDC microloans are generally of low value, ranging from $ 2,500 to $ 50,000. Like standard business loans, VEDC microloans take six months to five years to repay. The interest rate for VEDC microloans varies between 5% and 7.7%. You can expect an upfront fee of 3% to 5% on VEDC microloans.
Micro business loans are the smallest loan plan ranging from $ 500 to $ 2,500. There is an 8.5% interest rate on these loans payable between six months and two years.
SMART Funding Program
The Housing Authority / County Community Development Commission of Los Angeles offers this program to extend financial assistance to small and medium-sized businesses. Businesses in sectors such as transportation, engineering and medical could apply for these loans. The SMART Financing Program offers loans of $ 25,000 to $ 1.5 million.
These loans could be used for different purposes such as real estate purchases, infrastructure acquisitions, rental renovations and product development. You can also use the funds to refinance debt, retain your workforce, and create jobs.
CalCAP (California Capital Access Program)
CalCAP has a credit loss reserve program that covers 100% of loans made by eligible small business lenders in California. Under this program, business owners could apply for a loan of up to $ 5 million.
However, some borrowers applying for loans under this program can only obtain registered capital of up to $ 2.5 million over three years. Only California businesses are eligible for a loan under the CalCAP program. At least 51% of your employees, payroll, profits, or business income must be in the state of California.
Does my business qualify for a loan in California?
Different lenders may have different eligibility requirements. However, most lenders consider the following:
- Annual sales
- Credit score
- Duration of your activity in business
You may need to establish business credit that will be separate from your personal credit score. Your chances of qualifying for a loan are higher if your business has a high credit rating. For start-up entrepreneurs, your business may not be eligible for SBA and bank loans. You must therefore apply for short-term financing and microloans.
If your business is not eligible for the above loans, you can apply for the loans online. However, finding local and online funds is not mutually exclusive. Before making a decision, you should consider the resources available to you at the local, state, and national level.