If you’re a small business owner in California and in need of a loan, you’re in luck. California offers a wide range of funding options to support your business growth. However, with so many choices available, it can be difficult to determine which financing package is best suited for your specific needs.
In this article, we will explore the top 10 small business loan options in California, focusing on their features, eligibility criteria, and advantages. We will also discuss how to identify potential scammers posing as SBA loan providers. Lastly, we’ll introduce two alternative financing options offered by Backd, a trusted financial partner.
10 Options for Small Business Loans in California
In addition to traditional bank loans, there are 11 alternative loan options available to small businesses in California. Let’s take a closer look at each of them:
1. SBA 504 Loan Program
The Small Business Administration (SBA) operates various loan programs nationwide, including the popular SBA 504 loans in California. With this loan, the SBA provides 50% of the loan amount, while a private sector financial institution contributes 40%. The remaining 10% is the borrower’s responsibility, similar to a down payment for a mortgage.
SBA 504 loans can be used for commercial real estate projects or machinery and equipment purchases. To qualify, your business must have annual revenues of less than $5 million and a tangible net worth of less than $15 million. The loan repayment period is up to 25 years.
2. SBA 7(a) Loan Program
The SBA 7(a) loan program offers two types of loans: standard and small. The maximum loan amount for the standard loan is $5 million, while the small loan allows borrowers to access up to $350,000. Collateral may be required for loans above $25,000.
Repayment periods vary based on the purpose of the loan, ranging from 10 to 25 years. No collateral is required for loans below $25,000.
3. SBA Microloans
SBA microloans are available for amounts up to $50,000 and have a maximum repayment period of six years. To be eligible, businesses must have been operational for at least two years. While microloans cannot be used for real estate purchases, they can be utilized for inventory, machinery, equipment, and working capital.
4. Valley Small Business Guaranteed Loans
Fresno First Bank provides small business loans in the Central Valley area of California, with a state guarantee of up to $1 million. They also offer SBA 7(a) loans, SBA 504 loans, and SBA Express loans.
5. California Small Business Loan Guarantee Program
The California Small Business Loan Guarantee Program provides loan guarantees for small businesses, reducing the risk for lenders such as banks and credit unions. This program covers a wide range of financing needs, including startup costs, expansion, inventory purchases, construction projects, agricultural purposes, disaster relief, export financing, and working capital.
Loan amounts can go up to $5 million, with the program guaranteeing up to 80% of the loan. Each Financial Development Corporation (FDC), in collaboration with the iBank Small Business Finance Center, has its own eligibility requirements and interest rates.
6. Accion Opportunity Fund
Accion Opportunity Fund is a non-profit organization that offers small business loans ranging from $5,000 to $100,000. They provide affordable interest rates and flexible repayment terms, considering more than just credit scores. Alongside financial support, they offer business coaching, mentoring, and a comprehensive business resource library.
7. California Capital Access Program for Small Business (CalCAP SB)
CalCAP SB encourages financial institutions to extend lending to small businesses in California. By making matching contributions to partner lenders’ loan loss reserve accounts, CalCAP SB provides a safety net, enabling businesses to access term loans when they might otherwise be denied. Loans of up to $5 million are available, with additional support available for businesses in severely affected communities.
8. Jewish Free Loan Association (JFLA) Small Business Loans
The Jewish Free Loan Association offers interest-free small business loans to companies in California, regardless of race or religion. These loans do not charge fees or require monthly repayments. Applicants must have a credit score of 580 or higher and provide one or two guarantors with good standing credit. Loan amounts range from $7,500 to $36,000.
9. Working Solutions
Working Solutions is an organization that offers small business loans from $5,000 to $100,000. They have fixed interest rates between 9% and 11% with no minimum revenue requirements, no need for collateral, and no strict credit score criteria. They specialize in financing for startup and early-stage businesses, providing one-to-one business consulting to help entrepreneurs succeed.
Accessity provides term loans ranging from $300 to $100,000 for startups and growing businesses in California. They support women-owned, diverse-owned, veteran-owned, and food-and-beverage businesses. Accessity offers low-interest rates, no prepayment penalties, and a simple application process.
Beware of SBA Loan Scammers Operating in California
While SBA loans can be immensely helpful, it’s essential to stay vigilant against scammers attempting to exploit unsuspecting business owners. If someone asks for your bank details or requests an upfront fee, they may be posing as SBA loan providers.
To report suspicious activity or seek guidance, contact the SBA’s Office of Inspector General at 800-767-0385 or submit a complaint online or by mail.
Small Business Loan Alternatives in California from Backd
Don’t limit your options to the SBA and traditional financial institutions. Backd offers two alternative financing solutions: business lines of credit and working capital advances.
With a working capital advance, you can borrow between $25,000 and $2 million, while a business line of credit offers loans ranging from $50,000 to $750,000. Applying is quick and easy, taking only three minutes, and you could receive your financing as soon as tomorrow.
Remember, finding the right loan for your small business in California is crucial for its growth and success. Explore your options, consider your business’s unique needs, and choose the loan option that aligns best with your goals.
To learn more about Backd and explore their financing solutions, visit ATICE.INFO.