Loan Programs: Guide to Securing Business Funding in California

The current year with the COVID-19 pandemic has been incredibly challenging for many businesses and profounding impacted industries. It has forced many to close either permanently or temporarily. Those who are still open have been forced to rethink their operational models and retool their organization to adapt to a changing business landscape. Those brave individuals with innovative ideas may be tempted to start a business, despite the pandemic.

But you can’t do any of this without funding, which may be more challenging to secure in an uncertain business climate. Fortunately, the state of California has more options for small business owners than other states. As a whole, the state tends to be more supportive of small businesses’ efforts, and it has higher lending standards, ensuring that lenders follow transparency regulations when financing small businesses.

If you are seeking funding for your small business in 2020, there are several small business loan programs you may want to consider:

California Capital Access Program (CalCAP): This loan loss reserve program can provide up to 100% coverage on losses resulting from certain loan defaults. Applicant businesses must have between 1 and 500 employees with a base in California, and they are limited to a maximum of $2.5 million enrolled over three years. The expended funds must go toward projects created and maintained in California.

California Small Business Loan Guarantee Program: This program is administered through the Small Business Finance Center (SBFC) to provide capital to growing businesses. Applicant businesses must have between 1 and 750 employees, and they can request up to $20 million in funding to meet a variety of business needs.

California Jump Start Loan Program: This loan program is specific to businesses opening or operating in low-wealth communities. It is administered by the California Infrastructure and Economic Development Bank (IBank). Applicant businesses can receive up to $10,000 for start-up or ongoing costs, inventory, asset acquisition, and improvements.

SBA Community Advantage Loan: This loan program helps businesses that are not traditionally bankable. The proceeds can be used for working capital, equipment, inventory, expansion, real estate, and improvements. The maximum loan amount is $150,000 for each business.

CA Infrastructure and Economic Development Bank (IBank) Finance Program: This loan program uses $50 million set aside by California to mitigate barriers to capital for small businesses with between 1 and 750 employees that may not qualify for federal funds. Examples of targeted businesses are those in low-wealth communities and those that serve an area with a high immigrant population.

Community Reinvestment Loan: These loans are directed to small businesses that can reinvest in their community. The maximum loan amount is $25,000 for each borrower, and the funds can be used for working capital, equipment, inventory, expansion, real estate, and improvements.

Valley Economic Development Center (VEDC) Loan: Loans from this institution are available to businesses in New York and California. Businesses can borrow between $50,00 and $500,000 for expansion, debt refinancing, operational expenses, or working capital.

Covid-19 Economic Injury Disaster Loan: The Economic Injury Disaster Loan (EIDL) accepts applications from all small businesses, including agricultural industries, to provide economic relief due to a temporary loss of revenue related to Covid-19. Qualified businesses can seek a loan for up to $2 million and use the proceeds for operating expenses, rent, utilities, and fixed debt payments.

Loan Programs for the Los Angeles Area

Economic Development Administration (EDA) Revolving Loan Fund: These loans are directed at small businesses in Los Angeles that are not traditionally bankable and can create or retain jobs. The maximum loan amount is $650,000, and the proceeds can be used for working capital, equipment, inventory, expansion, real estate, and improvements.

Los Angeles County Development Authority: This loan program is specific to Los Angeles County businesses in the manufacturing, clean technology, health/medical, or transportation development industries. Loan applicants can use the proceeds for various business needs, including asset acquisition, inventory, working capital, and refinancing.

Loan Programs for Northern California

Working Solution Loan: Working Solutions lends to start-ups and established businesses in nine Bay Area counties. Qualified companies can borrow between $5,000 and $50,000.

Heritage Bank: Heritage Bank of Commerce serves small businesses in the San Jose region of California. Their loans may be used for short- or long-term business goals.

Loan Programs for the San Diego Region

San Diego Commercial and Business Financing: SDCBF lends for commercial real estate purchases primarily, although they have some loan options for small businesses.

This list represents an overview of some of the available funding to small businesses in California.