16 California Small Business Loans and Funding Programs
As a small business owner in California, you may find yourself in need of financing. Whether you need to cover startup costs, upgrade your equipment, bridge a seasonal cash flow gap, or rebuild after a natural disaster, you don't have to go it alone. There are many available funding options and small business loans in California.
Use this guide to discover 16 financing opportunities you can apply for. We'll highlight key details about your available resources, including how much you can borrow and eligibility requirements.
16 Small Business Loan and Funding Options in California
If you’re in need of financing for your small business in California, here are some options you can consider. This list includes a number of loan and funding options that are available from state and federal programs, nonprofit organizations, banks, credit unions, and private and online lenders.
1. California Small Business Loan Guarantee Program
The California Small Business Loan Guarantee Program offers loan guarantees for small businesses, making lending to them less risky for institutions like banks and credit unions. The program is operated by the iBank Small Business Finance Center in conjunction with seven Financial Development Corporations (FDCs).
You can borrow the money to pay for startup costs, business expansion, inventory purchases, construction projects, agricultural purposes, disaster relief, and export financing. You can also use it for working capital purposes.
You can borrow up to $5 million, but the program's guarantees only cover up to 80% of what you borrow. Each FDC has its own eligibility requirements, so check which offers the most favorable terms before proceeding.
Repayment terms for the loans are often a minimum of seven years. Interest rates vary depending on the lender you work with.
Please note that iBank is sometimes referred to as the California Infrastructure and Economic Development Bank.
2. California Capital Access Programs (CalCAP)
CalCAP SB incentivizes financial institutions to extend lending to California's small business owners. They provide a safety net for lenders, making matching contributions to partners’ loan loss reserve accounts. This has helped thousands of California small businesses unlock access to term loans, when their applications would otherwise have been denied.
Loans of up to $5 million are available under CalCAP SB for most purposes and to most business sectors. Businesses in “severely affected communities,” such as those with high local unemployment, low-income communities, or those declared as emergency or disaster areas by the governor, may apply for more.
Companies with up to 500 employees can apply. Lenders set the interest rate, which cannot be higher than 20% APR on any single loan.
CalCAP also coordinates the Americans With Disabilities Act (ADA) Financing Program for firms with 30 full-time employees or fewer to help with the cost of altering or retrofitting their facilities to comply with the ADA.
3. Accion Opportunity Fund
Accion Opportunity Fund is a non-profit organization that offers small business loans ranging from $5,000 to $250,000. Its borrowers enjoy affordable interest rates starting at 8.49% and flexible repayment terms. However, your business must have been in operation for at least one year to qualify for this financing option.
The fund provides a personalized approach to lending. In contrast to traditional financial institutions, they take into account more than just credit scores. In addition to small business loans to California companies, they offer business coaching, mentoring, and a comprehensive business resource library to their borrowers.
Accion also offers working capital loans and equipment financing.
4. Jewish Free Loan Association
The Jewish Free Loan Association provides interest-free small business loans to companies in California, offering support to all, regardless of race or religion. They also don’t charge fees or require you to make monthly repayments.
They do need to see evidence that you can repay the loan. To apply, you must have a credit score of 600 or higher. You must provide one guarantor whose credit is also in good standing to borrow up to $7,500. If you can provide two guarantors, the maximum amount you can borrow increases to $36,000.
5. Working Solutions CDFI
Working Solutions CDFI is an organization that offers small business loans ranging from $5,000 to $100,000 with fixed interest rates between 9% and 11%. They have no minimum revenue, no need for collateral, and no credit score requirements. They promise an easy application process for borrowers.
Working Solutions specialize in financing for startup and early-stage businesses. The key to their service is the one-to-one business consulting they provide to help entrepreneurs succeed.
To be eligible for a loan, your business must be at least one year old and operate in their 19-county service area. They provide funding and support to U.S. citizens, permanent residents, and ITIN holders.
6. Accessity
Accessity offers term loans ranging from $300 to $150,000 for startups or growing businesses at a fixed interest rate of between 8.99% to 14.99%. Repayment terms of 12 to 84 months are available, depending on your loan amount. There are no prepayment penalties or application fees.
The organization specializes in funding women-owned, diverse-owned, veteran-owned, and food-and-beverage businesses.
7. Los Angeles Federal Credit Union Business Loan
The Los Angeles Federal Credit Union (LAFCU) was formed when 13 of the city's unions came together during the Great Depression. The LAFCU offers a wide variety of financing packages, including business loans.
Their commercial loans can be used for any business-related purchase including inventory and equipment acquisition. They offer a 48-hour prequalification turnaround on decisions, no application fee, and flexible repayments. Firms can borrow between $20,000 and $5 million and must have been in business for at least two years.
8. Banc of California Small Business Lending
The Banc of California is a dedicated business bank with branches across the state. In addition to offering SBA loans, its range of funding options includes:
General SMB loans: Borrow from $250,000 up to $8 million on terms of 10 or 25 years with variable or fixed interest rates.
Asset-based lending: Raise capital against your business equipment, inventory, and accounts receivables.
Owner-occupied real estate financing: Cash you can use to buy, build, or expand commercial properties.
Service business lending: Long-term lending for healthcare, veterinary, and insurance businesses.
Franchise owners: Money for franchisees to buy new territories and build their first or additional locations.
9. GoGreen Financing
Part of the California Hub for Energy Efficiency Financing (CHEEF), GoGreen Financing helps businesses meet the cost of upgrading their equipment and facilities to become more environmentally friendly.
They have a wide selection of funding partners, offering loans of between $5,000 and $5 million over terms of 12 to 180 months. You can use a GoGreen Financing facility to invest in a range of green upgrades, from high-efficiency appliances and clean energy generation to EV charging and water heating.
10. California Grants Portal
One option you might want to consider is applying for a grant. At the time of writing, the California Grants Portal (CGP) provides details of 169 forecasted or active programs, totaling $15.4 billion in funding across eight priority sectors, ranging from environment and disadvantaged communities to housing and agriculture.
You can't apply for grants through the portal. Instead, you have to apply through the different state agencies running these individual grant programs. Be aware that the site only lists grants offered on a first-come or a competitive basis. Other grants are available, but they are not listed by the CGP.
11. Backd Working Capital Advance
A working capital advance is a type of business financing that covers short-term gaps in cash flow, whether they are caused by a temporary dip in sales or an unexpected bill. Working capital advances allow companies to cover general overhead costs like payroll, rent, and inventory purchases.
Backd offers working capital advances of $25,000 to $2 million. Fast turnaround is assured, and the money could be in your checking account within as little as 24 hours. You can choose from automatic daily, weekly, or semi-monthly repayments.
12. Backd Business Line of Credit
Business lines of credit work in much the same ways as credit cards. Your lender agrees to make a maximum sum of money available to you, called your "limit." You can access the cash whenever you want.
The amount you spend using your business line of credit minus any repayments you've made to date is your "balance." Your balance can never be greater than your limit. Every time you make a repayment, that money becomes available again to borrow.
One key advantage of business lines of credit over standard lump-sum loans is that you only pay interest on the balance, not on the limit. Depending on how you use your business line of credit, this can lead to significant savings.
Backd offers business lines of credit that provide companies with instant access to revolving credit up to $750,000. Repayments are weekly, and you must clear the balance in full in either six or 12 months. With this option, you could be approved and funded within 24 hours.
13. Small Business Administration (SBA) 7(a) Loan
There are two types of SBA 7(a) loans, the small loan and the standard loan.
Terms for the standard 7(a) loan are:
You can borrow up to $5 million.
On loans above $25,000, your lender will want collateral from you to the “maximum extent possible.”
For small 7(a) loans, the terms are:
You can borrow up to $350,000.
On loans above $25,000, your lender will want the same amount of collateral as if you’d applied for a non-SBA loan with them.
On either type of loan, no collateral is required for amounts up to $25,000.
It’s up to the private lender to set the interest rate, but that can’t be higher than the SBA maximum, which ranges from base rate plus 6.5% for loans of $50,000 or less to base rate plus 3% for loans of $350,000 or more.
The maximum repayment period for real estate loans is 25 years. For equipment, inventory, or working capital loans, the period is 10 years.
14. SBA 504 Loan Program
The U.S. Small Business Administration operates various loan programs nationwide. One of the most popular is the SBA 504 loan.
With this loan, the SBA backs 40% of your loan amount, a third-party lender provides 50%, and it’s up to you to contribute 10%, much like providing a down payment when you apply for a mortgage.
You can use SBA 504 loans to fund or refinance the following:
Commercial real estate projects: After the project is completed, your business must occupy at least 51% of the space in the property.
Machinery and equipment purchases: Anything you buy for your business must last at least 10 years.
You also must have an average net income of less than $6.5 million a year and a tangible net worth of less than $20 million to be eligible for a loan. You have up to 25 years to repay the loan.
One of the purposes of an SBA 504 loan is economic and community development. In your business plan, you need to show how borrowing the money will create or keep jobs. You need to keep or create one job for every $75,000 guaranteed by the SBA. For small manufacturers and energy projects related to public policy, that figure is $140,000.
SBA 504 loan interest rates are fixed, set slightly above the current market rate for 10-year U.S. Treasury bonds. Program fees total around 3%, which you can include in the total loan amount you take out.
To apply, contact your local certified development company. You can find one with the SBA Lender Match tool.
15. SBA Microloan Program
SBA microloans allow you to borrow up to $50,000 for up to six years. You need to have been in business for two full years before you submit your application. Your lender sets the interest rate you pay, which generally varies between 8% and 13%.
You can’t use a microloan to refinance or purchase real estate — you would need an SBA 504 loan for that. However, you can use your loan for working capital or to buy inventory, machinery and equipment, furniture, and supplies.
The intermediary lender for an SBA microloan will likely require collateral. You also may need to sign a personal guarantee, meaning that you will be personally liable for repaying any outstanding balance in full if your business fails.
16. SBA Disaster Assistance for California Wildfires
The SBA offers a range of assistance programs for businesses affected by declared natural disasters, including the recent wildfires in California.
With a Business Physical Disaster Loan (BPDL), you can receive up to $2 million to repair or replace inventory, fixtures, machinery, property, and other business equipment. The funds can also be used on leasehold improvements, but not on upgrading or expanding your business.
They also offer Economic Injury Disaster Loans (EIDL) for businesses that can't pay their regular operating expenses and meet other financial obligations.
For both loan options, the maximum term is 30 years with no prepayment fees or penalties. The first payment is deferred for 12 months and interest does not accrue for the first year either. The SBA will require collateral, preferably real estate.
If you can't get credit from elsewhere, the interest rate is 4% on a BDPL, but if you can, it's 8%. EIDLs are only available to companies unable, in the SBA's opinion, to get credit from another source.
Beware of SBA Loan Scammers Operating in California
SBA loans help businesses out all across the state, from Sacramento and Los Angeles County to San Diego and San Francisco.
However, there are criminals active in California trying to steal money and data from business owners by pretending to offer SBA loans. If someone asks you very early on for your bank details or to pay a fee, they may not be who they say they are.
If you’re concerned, call the SBA's Office of Inspector General at 800-767-0385 or submit a complaint online or by mail.
Economic Trends Affecting Small Business Lending in California
In California, small businesses are a critical part of the economy. They contribute over 90% of the state’s GDP and employ the vast majority of its workers.
At the moment, businesses operating for less than three years are generating job growth at a higher rate than more established companies. Key sectors seeing strong growth in the number of new starts include healthcare, hospitality, and agriculture.
Over the past few years, inflation has been higher than the long-term average. There are worries that a potential trade war involving the raising of tariffs on imports might stoke inflation even more. If that happens, higher inflation could lead to increased interest rates, raising borrowing costs and making small business loans more expensive and difficult to obtain.
Choose the Right Funding or Small Business Loan in California
There are many choices available for businesses looking for funding in California. Think about how much you need, what eligibility requirements you can meet, and how quickly you need the financing.
Backd offers two main funding options for small businesses in California:
Working capital advance: Access between $25,000 and $2 million (minimum one year in business required).
Business line of credit: Borrow between $50,000 and $750,000 (minimum two years in business required).
To be eligible for our lending solutions, you must be based in the U.S., have established business credit, have a brick-and-mortar address, a minimum credit score of 625, and a minimum monthly revenue of $100,000.
Apply now and be funded within as little as 24 hours.
