Table of contents
Small Business Loans in California: Best Options in 2022
Looking for small business loans in California? Know that you have many different options to choose from.
Fortunately, as a small business in California, you have the benefit of some of the strictest laws in the nation when it comes to transparency. California’s SB 1235 law requires disclosures for small business loans similar to the ones imposed by federal law on consumer lending products.
California’s SB 1235 law specifically prohibits making a “materially false or misleading statement to a borrower about the terms or conditions of a loan,” according to the California Legislature. Basically, this means that your loan provider cannot lie or mislead you into opting for something you aren’t completely informed about.
Your provider needs to act ethically and disclose all applicable information, including the total cost of your financing displayed as a yearly rate. Not only does the legislation keep the industry fair across the board, but it also allows you to take legal action if someone violates this law, permitting you to right the wrong.
Small business loans enable you to put your growth plans in motion. You can use funds to launch marketing campaigns, prepare for new opportunities, purchase equipment, and even diversify your product and service offerings.
Financing can also bridge cash flow gaps and allow you to manage unexpected expenses, allowing you always to stay one step ahead.
Small Business Loan Qualifications
1 Year in Business
Even as a young growing business, you can still find financing options.
$500K in Annual Revenue
To qualify, your business must be generating a minimum of $500,000 in annual revenue.
No Minimum Credit Score
We have financing options for business with excellent and bad credit.
How Can I Get Small Business Loans in California?
There are a number of different ways to secure small business loans in California. For starters, you can choose from banks, credit unions, and online lenders.
Banks and credit unions are known for having the lowest interest rates on lending products. However, these lenders tend to have tight requirements, and you’ll typically need good credit and at least two years of business history to qualify.
You’ll also need to meet a number of revenue and business plan requirements.
Online lenders, on the other hand, are more flexible. They tend to offer a wider range of financing solutions for all types of businesses, including newer startups. They’re also renowned for fast funding times, with turnarounds as quick as 24 hours in some cases.
Alternative Options for California Small Business Loans
Aside from banks and online lenders, there are also a number of non-profit and government-sponsored California small business grants.
These funding programs feature unique benefits but are best for smaller financing needs.
- Valley Economic Development Center Small Business LoansCalifornia Capital Access Program for Small Business
- California Small Business Loan Guarantee Program
- Accion Opportunity Fund
- Los Angeles Federal Credit Union
- LA Community Development Commission/Housing Authority SMART Funding Program
- Working Solutions Community Development Financial Institution (CDFI)
What Are the Types of Small Business Loans in California?
No two small businesses are alike. The diverse range of small business loans in California can seem overwhelming at first, so it helps to break down each by distinct qualities.
This way, you can compare based on your business’s specific needs.
Term Loans
Term loans are one of the most common types of small business loans in California. They’re structured as a lump sum deposit broken down into regular payments for the duration of the loan.
Term loans can make large purchases or investments more manageable by distributing payments over time. In other words, you’ll be able to repay your debt as your business generates income rather than all at once.
Most equipment, commercial real estate, and even SBA loans are set up as term loans.
Term length
Can be short-term or long-term – less than one year or up to 25 years
Interest rates
Starting at the prime rate to 6%
Ideal for
One-off purchases or investments, when you know exactly how much a project will cost, long-term financing needs
Business Line of Credit
Business lines of credit work similarly to credit cards. You’ll be granted a maximum credit limit you can borrow from as needs arise, and you’re only charged interest on the amount of money you actually use.
Business lines of credit are very flexible and can be used for a variety of purposes, such as working capital needs or going after growth opportunities.
With a business line of credit, you’ll typically be able to access new funds up until your credit limit as you pay down your balance.
Term length
Revolving
Interest rates
Starting at the prime rate to 6%
Ideal for
Ongoing purchases or investments, flexibility, when you don’t know the exact cost of a project, long-term financing
SBA Loans
Small Business Administration (SBA) loans are government-backed loans featuring low-interest rates and high funding amounts. SBA loans can be as small as a couple thousand or as large as $25 million.
They can be used for almost any type of legitimate business expense, such as working capital needs, real estate purchases, growth investments, and more.
Veterans and certain minorities can even qualify for special programs and resources. SBA loans are offered through the SBA’s approved participating lenders, typically banks and online lenders.
Term length
Can be short-term or long-term – less than one year or up to 25 years
Interest rates
Starting at the prime rate
Ideal for
Borrowers with good credit
Alternative Financing
Some of the best options for small business loans in California are found through alternative financing. Alternative financing is typically offered by online lenders and can be any financing product outside the scope of traditional term loans, lines of credit, or SBA funding.
Alternative financing includes merchant cash advances, accounts receivable financing, purchase order financing, and more. These funding solutions each target a specific niche and are designed to fill the gap where traditional business loans fall short.
For example, merchant cash advances are a way for retailers to get an advance on their future sales. With no regular payment schedule, this product isn’t exactly a loan. Instead, borrowers automatically have a portion of their daily credit card sales deducted.
Both accounts receivable financing and purchase order financing are a way to turn outstanding invoices into immediate cash. But, while the former involves selling unpaid invoices entirely for a portion of their value, purchase order financing allows you to use I.O.U.s as collateral for funding.
Term length
Generally short-term – no more than two years
Interest rates
Some products may start at the prime rate, but expect higher rates on average
Ideal for
Borrowers with immediate cash needs, borrowers with limited credit history or time in business
Compare Small Business Loans in California
At National Business Capital, we help businesses find the most optimal financing solutions based on their qualifications and needs. We understand that there’s no one-size-fits-all approach when it comes to business loans, which is why we work to bring you personalized options.
Our expert Business Finance Advisors leverage a 75+ lender marketplace to streamline our client’s search for the right lender. You apply once and receive multiple competitive offers, all while our team helps you select the one that best fits your circumstances. We’re just as invested in your success as you are because we’re entrepreneurs, too.
We know your industry, won’t shackle you with anything you aren’t 100% comfortable with, and can save you the time and frustration of having to apply with lenders one by one. With $2 billion recovered and 2,000+ 5-star reviews on Trustpilot, National Business Capital is the right partner in growth as you grow and win business.
