Expert Advice on Small Business Loans in California
California has nearly 4 million small businesses within its borders. The Golden State relies on these companies to improve its economy. As a small business owner in the state, raising working capital can be beneficial for your business. With enough cash flow, you can pay bills and other business expenses.
Loans can be used to meet your various needs including buying supplies and real estate to grow your business. This guide provides detailed information on 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.
Companies in these counties can borrow from $ 300 to $ 8,000 with a three-year repayment plan. Initially, the interest rates are set from 14% to 18% with an additional 1% discount for veterans, service staff on active duty and their spouses.
Quick loans are available three days after approval. The requirements for the Accion Quick Loan Application include:
- Trade tax returns for the previous year
- Business address
- Proof of address
- Sign up
- At least 550 creditworthiness
Small Business Loan Guarantee Program
The California government is working with various FDCs (Financial Development Corporations) to give small businesses access to the loan guarantee program. The program provides 80 to 95% of small business loans from FDCs.
Entrepreneurs who qualify for assistance under this program must run a small business in California with 750 employees or less. Small business loans are available up to $ 20 million, although the maximum guaranteed is $ 2.5 million. The average term of these loans is at least seven years. Finally, the interest rate may differ depending on the direct lender offering you the loan.
VEDC (Valley Economic Development Center)
This non-profit organization offers three types of small business loans. Standard corporate loans range from $ 50,000 to $ 500,000 with a repayment period of six months to five years. Generally there is an initial fee of 2% to 3% with a minimum interest rate of 8%.
VEDC microloans are typically as low as $ 2,500 to $ 50,000. As with standard corporate loans, the VEDC microloans take six months to five years to repay. The interest rate for VEDC microloans is between 5% and 7.7%. Expect an initial 3% to 5% VEDC microcredit fee.
Microloans are the smallest loan plan between $ 500 and $ 2500. These loans bear an interest rate of 8.5% for between six months and two years.
SMART funding program
The Los Angeles Housing Authority / County Community Development Commission offers this program to provide financial support to small and medium-sized businesses. Companies in industries such as transportation, engineering, and medicine could apply for these loans. The SMART Funding program offers loans ranging from $ 25,000 to $ 1.5 million.
These loans can be used for a variety of purposes, such as real estate acquisition, infrastructure acquisition, leasehold renovation, and product development. You could also use the funds to refinance debt, retain your employees, and create jobs.
CalCAP (California Capital Access Program)
CalCAP has a loan default reserve program that covers 100% of the loans made by eligible lenders to small businesses in California. Under this program, business owners could apply for a loan of up to $ 5 million.
Nonetheless, certain borrowers seeking credit under this program may only receive registered capital of up to $ 2.5 million, spread over three years. Only California companies can qualify for a loan under the CalCAP program. At least 51% of your employees, payroll, profits, or business revenue should be in the state of California.
Will my company qualify for a California loan?
Different lenders may have different approval requirements. However, most lenders consider the following:
- Annual business turnover
- Duration of your business activity
You may need to establish a business credit score that is separate from your personal credit score. Your chances of getting a loan are higher if your company has a good credit rating. For start-up entrepreneurs, your company may not be eligible for SBA and bank loans. Therefore, apply for short-term grants and microloans.
If your business is not eligible for the above loans, you can apply for online loans. However, finding local funds and online funds are not mutually exclusive. Before making a decision, consider the resources available to you at the local, state, and national levels.