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The Golden State of California is home to over 4 million small businesses extending from San Diego and Los Angeles north to San Francisco and Sacramento. The state relies on these companies to sustain its economy. Keep reading to learn more about small business loans in California.

It’s only right that there are resources to support these small businesses in return! There are many types of small business loans in California that can help businesses like yours thrive.

How a Loan Can Help Your California Small Business

Access to working capital has many advantages for small businesses. While cash flow is sometimes an issue, perhaps because your clients take months to pay their bills, having cash in your bank account means you can still pay for your own business expenses.

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

California Small Business Loan Options

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

COVID-19 Loans

California has been hit hard by the coronavirus pandemic, and state and federal governments have stepped in to help. At the federal level, there were economic relief programs including the Paycheck Protection Program (PPP) and Economic Disaster Loans (EIDL).

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

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

Bank loans

Financial institutions such as banks, credit unions, and online lenders offer longer term business loans with low interest rates. Note: These are known to be the hardest to get at times, so make sure you have solid credit.

SBA Loans

Small Business Administration-backed loans may be a little easier to get, and they also offer long repayment terms and low rates.

There are a variety of SBA loans, from the 7(a) loan to the SBA 504 loan. Some are to 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, say, $10,000, you could borrow $7,000 now and pay it back, then borrow $10,000 and pay it back. It will continue to be available while you repay what you borrowed.

Short term loan

Not all business owners in California have great credit, but there are always financing options, such as a short-term loan. Keep in mind that these loans have short repayment periods (sometimes just a few months) and higher interest rates.


Another good option if your credit is not good, microcredits provide smaller amounts, usually up to $50,000.

How to choose the right loan for your California small business

With so many financing options, it’s important to take the time to determine what your financing needs are. Are you looking to buy a property to build a factory? You might want to consider an SBA or bank loan with a 25-year repayment term so you can take your time paying off that larger loan.

If you don’t have good credit, you’ll have to weigh the higher cost of borrowing against the return you’d get from reinvesting the money in your business.

How to Qualify for a Small Business Loan in California

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

  • Your credit score
  • How long have you been in business
  • Your annual income

Your personal and professional credit scores can be taken into account, so if you don’t have professional credit scores, learn how to establish business credit. The higher your scores, the better offers you will be eligible for.

If you’re running a start-up, you may not be eligible for bank or SBA loans, so look at the qualifications for microloans and short-term loans.

How to Get a Small Business Loan in California

Small business owners must provide information about their business and themselves in the application process, regardless of the type of financing they choose.

Some apps, such as online lenders, may only ask for information about your business and its annual income. Others, like the 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 help setting one up through a California state organization, such as a small business development center.

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

California Business Loan Alternatives

You are not limited to the financing options we discussed above. Here are some alternatives to consider, especially if you’re struggling to qualify for bank or SBA loans.

Credit card

Some California companies find it easier to qualify for business credit cardsand 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 weak credit, a merchant cash advance could be a good way to access funds. This is an advance on future credit card sales, and is repaid daily or weekly through automatic repayments.

Small Business Grants

Although they are not loans, small business grants can provide the capital you need and they do not have to be repaid. There are grants for businesses in certain sectors, as well as businesses run by women, veterans, and minorities.

The financing your California business needs

With so many financing options, there’s no reason for your business to be in trouble. Navigation can help you find the best financing solution for your needs.

This article was originally written on July 8, 2021.

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