Financing Your Californian Dream: Top Small Business Loan Options

Financing Your Californian Dream: Top Small Business Loan Options

Considering a small business loan in California? With diverse options available, finding the right fit is crucial! Let’s explore factors to navigate toward the best funding package for your unique business needs.

California’s Top 10 Small Business Loan Options

1. SBA 504 Loan Program

The SBA oversees some lending initiatives around the country, including the well-known SBA 504 loans in California. It’s similar to making a down payment on a home; you fund the remaining 10% after the SBA contributes 50% and a commercial bank contributes 40%. SBA 504 loans aid commercial real estate and equipment purchases with specific eligibility criteria: annual sales below $5 million, tangible net worth under $15 million, and repayment within 25 years. They support community and economic development, requiring a business plan showing job creation or retention. Commencing in May 2023, the employment criteria were raised to $90,000 for the majority of projects and $140,000 for small industrial and energy projects.

SBA 7(a) Loan Program

There are two types of SBA 7(a) loans: small and standard.

Standard 7(a) loan terms:

  • Maximum loan amount: $5 million
  • Collateral required for loans over $25,000, to the fullest extent possible

Small 7(a) loan terms:

  • Maximum amount: $350,000
  • For amounts more than $25,000, the same collateral requirements apply as for non-SBA loans

Loans of up to $25,000 do not need collateral.

Repayment period:

  • Real estate loans: Up to 25 years
  • Equipment, inventory, or working capital loans: Up to 10 years

1. SBA Microloans

For six years, SBA microloans provide up to $50,000. Businesses must operate for two years before applying. Not for real estate, but usable for inventory, equipment, and working capital. Collateral and personal guarantees are often required.

2. Valley Small Business Guaranteed Loans

Fresno First Bank offers small business loans California with a concentration on the Central Valley and a statutory guarantee of up to $1 million. They also provide loans under SBA 7(a), 504, and SBA Express.

3. California Small Business Loan Guarantee Program

By providing loan guarantees to small firms, the California Small Business Loan Guarantee Program assists banks and credit unions in managing risk. It serves a range of company requirements, including working cash, growth, and beginning expenditures. In collaboration with seven Financial Development Corporations (FDCs), the iBank Small Company Finance Center is in charge of its administration. It may be possible to guarantee up to 80% of the loan amount, enabling you to borrow up to $5 million. Each FDC sets its eligibility criteria. Repayment terms are typically seven years minimum, with interest rates determined by the lender.

4. Accion Opportunity Fund

The charity Accion Opportunity Fund provides small business loans with interest rates as low as $5,000 and payback lengths of up to $100,000. Customized loans are given first attention, with consideration given to factors outside credit scores. In addition to loans, they provide business resource libraries, coaching, and mentorship to Californian companies.

5. California Capital Access Program for Small Business (CalCAP SB)

CalCAP SB adds to loan loss reserve funds to encourage lenders to provide credit to small companies in California. Many enterprises that would not have been able to get term loans without our help now have access to them. CalCAP SB offers loans for various purposes and sectors, up to $5 million. Businesses in severely affected communities may apply for higher amounts.

6. Jewish Free Loan Association (JFLA) Small Business Loans

Regardless of color or religion, California businesses may apply for interest-free small business loans from the Jewish Free Loan Association, which also offers no fees or monthly payback obligations. For loans up to $7,500, applicants must have one guarantor with solid credit and a credit score of at least 580. The maximum loan amount increases to $36,000 if there are two guarantors.

7. Working Solutions

Operational Remedies Small company loans from $5,000 to $100,000 are available from CDFI, with fixed interest rates ranging from 9% to 11%. They have no requirements for credit score, collateral, or minimum income. The application procedure is simple to follow. They empower entrepreneurs with individualized business advising, with a focus on startup and early-stage companies. To qualify, a company must be operating in its 19-county service area for at least a year, serving citizens, permanent residents, or holders of an ITIN.

8. Accessity

For new or expanding companies, Accessity offers term loans with low-interest rates, no prepayment penalties, and no application costs in the range of $300 to $100,000. They specialize in providing finance to food and beverage, veteran-owned, women-owned, and diverse-owned companies.