Fundera business loans
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California's $3.9 trillion economy makes it the fifth-largest in the world, housing 4.2 million small businesses and growing. Running a small business is difficult enough, but with the recent economic turmoil, many businesses are desperate for capital to keep their doors open.
The good news is that California small businesses have access to a lot of government grants and programs, as well as funding options from the state's over 300 credit unions and 130 banks with thousands of branch locations.
Here's information about how to navigate those options and find the capital your business needs.
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How we picked theseThe Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
Comparing your local and national options can ensure you have access to the right financing for your business.
If your credit and financial history is good, you may consider shopping for loans at your local banks and credit unions first. Community banks often have specialty loans and programs to uplift local small businesses. The following are just a few examples of what you may find.
If your local options don’t pan out or you want to compare to make sure you get the best deal, consider more widely available options.
California’s grants and investment programs provide a lot of opportunities, many specifically designed to help women, startups, minorities or veterans.
If you don’t qualify for these programs or grants in your state, you can still explore other loan options for women, the top business loans for veterans and other business loans for minorities.
Every lender and loan program has its own set of eligibility requirements, but the general qualifications include:
Meeting general requirements like these can give you the most options in the loans market, but they don’t apply to all loans and lenders. Online lenders often are more flexible with credit requirements, and some loan programs are designed for newer small businesses or higher-risk borrowers.
The interest rates for small business financing in California depend on the type of financing you choose, your lender and your financial standing when you apply for the funding. But here are the median interest rates by loan type according to data from Lending tree.
| Financing type | Median interest rates |
|---|---|
| Term loans | 7.38% |
| Lines of credit | 7.40% – 7.90% |
| SBA loans | 12.00% – 15.00% |
| Merchant cash advances | 10% to 50% |
| Invoice factoring | 1.00% – 5.00% factoring fee |
Loan fees vary as widely as the loans and lenders, but there are some common fees you can expect to pay. For example, term loans may come with an origination fee, and lines of credit may come with an annual fee. Be sure to check your loan agreement for the fees you’ll be expected to pay before you sign on the dotted line.
Follow these steps to get the small business funding you need in California.
Once you know the amount of funding you need, determining the right type of financing can help you get the best rates and terms. The most common forms of financing include:
Business requirements for a loan vary widely by lender and financing type. But you can improve your chance of getting approved for the financing you want by making sure you qualify before you apply.
Lenders typically look for:
Comparing lenders is vital to find the best financing for your business. You can do the work on your own, reading reviews and comparing programs. You can also use lending marketplaces like Lendio, which allow you to fill out one application and compare offers from the lending partners connected to the service.
California boasts of a higher standard for lending practices, which mostly surrounds its Small Business Truth in Lending (SBTL) Act. In 2018, California introduced SBTL to institute transparency regulations on small business lenders. The act provides legal protections for secured loans, lines of credit, merchant cash advances and other financing over $5,000 but under $500,000. But its requirements only apply to private and online lenders, not traditional banking institutions.
Transparency disclosures include:
Check these state resources for additional small business lending resources and information:
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Buy real estate, another business or expand your enterprise.
You’ll have an easier time qualifying if you have strong credit and high revenue.
Find financing to grow your business — or even buy another.
Stay away from big banks for a loan of this size.