Small Business Loans in California

Small Business Loans in California

Small Business Loans in California

The Golden State, California, is home to over 4 million small businesses stretching from San Diego and Los Angeles all the way north to San Francisco and Sacramento. The state relies on these businesses to bolster its economy. Keep reading to learn more about small business loans in California.

It’s only fair that there are resources to bolster those small businesses in return! There are many types of small business loans in California that can help companies like yours thrive.

How a Loan Can Help Your California Small Business

Getting access to working capital has many benefits for small businesses. If cash flow is sometimes a concern, maybe because your clients take several months to pay invoices, having cash in your bank account ensures you can always pay your own business expenses.

Loans can be used for anything your business needs, from buying supplies to make products to purchasing real estate to expand your operations. 

Small Business Loan Options in California

When it comes to business financing, you’re spoiled for choice in California.

COVID-19 Loans

California was hit hard by the coronavirus pandemic, and both the state and federal governments stepped up to help. At the federal level, there were economic assistance programs including the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL).

In California, the California Small Business COVID-19 Relief Grant Program provided much-needed assistance.

Note that these programs may not currently be accepting new applications.

Bank Loans

Financial institutions like banks, credit unions, and online lenders, offer longer-term business loans with low interest rates. Note: these are known for sometimes being the hardest to qualify for, so make sure your credit is strong.

SBA Loans

Loans guaranteed by the Small Business Administration may be a little easier to qualify for, and they also offer long repayment terms and low rates.

There are a variety of SBA loans, from the 7(a) to the SBA 504 loan. Some must be used for specific purposes, such as economic development and community development. Others can be used to cover business expenses, equipment, and real estate.

Lines of Credit

If you don’t want all your financing at once, a line of credit gives you access to cash when you need it. If you’re approved for, let’s say $10,000, you could borrow $7,000 now and repay it, then borrow $10,000, and repay it. It will continue to be available to you as you repay what you’ve borrowed.

Short-Term Loan

Not every business owner in California has stellar credit, but there are still financing options available, such as a short-term loan. Do keep in mind that these loans have short repayment periods (sometimes just months) and higher interest rates.


Another good option if your credit isn’t great, microloans provide smaller amounts, usually up to $50,000.

California Loan Guarantee Program (Formerly California Small Business Loan Guarantee Program)

The California Loan Guarantee Program (formerly known as The Small Business Loan Guarantee Program) is part of a number of state loan programs established to help small businesses start or grow. If you’re looking for a small business loan in California but are worried you won’t qualify, this may be a good program for you. 

By encouraging lenders to give funds to local small businesses, the Loan Guarantee Program helps small businesses with fewer than 750 employees that might face barriers to financing access get the business startup loans they need. The program is run by the California Infrastructure and Economic Development Bank’s (IBank) Small Business Finance Center. 

Small businesses that are making local jobs throughout California can use the loans for business-related expenses, like:

  • Buying inventory
  • Making working capital
  • Using lines of credit
  • Start-up costs
  • Agricultural purposes
  • Construction
  • Business expansion

Qualifications are set by each lender, but lenders are encouraged to focus on small businesses that are creating jobs in low- to moderate-income communities. Entrepreneurs, self-employed individuals, microbusinesses, and small business owners are all encouraged to apply.

How to Choose the Right Loan for Your California Small Business

With so many financing options, it’s important to take your time to consider what your financing needs are. Are you looking to purchase real estate to build a factory on? You might want to consider an SBA or bank loan with a repayment term of 25 years so you can take your time paying off that larger loan.

If you don’t have great credit, you’ll have to weigh the higher cost of borrowing against the return you’d get from investing the money back into your business.

How to Qualify for a Small Business Loan in California

Eligibility requirements may vary from one lender to another, but generally, you can expect lenders to consider a few criteria:

  • Your credit score
  • How long you’ve been in business
  • Your annual revenues

Both your personal and business credit scores may be considered, so if you don’t have business credit scores, learn how to establish business credit. The higher your scores, the better the offers you’ll qualify for.

If you run a start-up, you may not qualify for bank or SBA loans, so look at qualifications for microloans and short-term loans.

How to Get a Small Business Loan in California

Small business owners must provide information about both their companies and themselves in the application process, no matter which type of financing they choose.

Some applications, such as those with online lenders, may only ask for information about your business and its annual revenues. Others, like SBA and bank loans, will want more details, including tax returns and financial statements.

You may also be asked for your business plan. If you don’t have one, you can get free assistance to create one through an organization in the state of California like a Small Business Development Center.

Once you are approved for a loan, you will be presented with your loan terms and the loan amount you qualify to borrow. If you agree, sign the documents, and your funds will be deposited into your business bank account in as little as one business day.

Alternatives to Business Loans in California

You’re not limited to the financing options we’ve discussed above. Here are a few alternatives to consider, especially if you have trouble qualifying for bank or SBA loans.

Credit Cards

Some California businesses find it easier to qualify for business credit cards, and they appreciate the versatility of being able to make purchases when they need to.

Some cards offer 0% APR for the first year, as well as rewards for purchases. 

Merchant Cash Advance

Especially for businesses with poor credit, a merchant cash advance could be a good way to get access to funds. This is an advance on future credit card sales, and is repaid daily or weekly through automatic repayments.

Small Business Grants

While these aren’t loans, small business grants can provide the capital you need, and they don’t have to be repaid. There are grants for businesses in certain industries, as well as those for women, veteran, and minority-run businesses.

The Financing Your California Business Needs

With so many options for financing, there’s no reason your business should struggle. Nav can help you find the best financing solution for your needs.

This article was originally written on July 8, 2021 and updated on June 10, 2022.

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