September 27, 2022 By Suzanne Robertson

Though California has had its challenges in recent years, the state still remains one of the most diverse and powerful in the country. From its snowy mountains and natural beauty in NoCal, down to its beautiful beaches and fantastic weather in SoCal, “The Golden State'' has a lot to offer.

See if you pre-qualify

According to Boost Suite, there are 4.8 million micro-enterprises in California, comprising 99.8% of all businesses in the state. Thanks to its multitude of major cities like San Francisco, San Jose, Los Angeles, and San Diego, simply operating out of California gives small businesses the opportunity to reach many important markets.

If you are ready to take a giant leap towards your company's growth, here's what you need to know about getting the low-cost funds you deserve to grow your business in California.

Financing Options for Established California Businesses

Some financing options are fast, others take more time, some are costly and others offer low-cost funds. So where do you turn? Here are options available in California for established small businesses.

SBA Loans in California

If you qualify, the Small Business Administration’s nationwide low-cost loan programs can be your best option. SBA loans have low rates, long terms and very low monthly payments.

There are three types of SBA loan programs available for business owners 7(a) Loan Program, the CDC/504 loan program and the microloan program.

The 7(a) Loan Program

An SBA 7(a) loan can be used for a variety of purposes.

  • Working Capital – Purchase equipment, increase inventory, add marketing programs, use for operating expenses or to hire additional staff.
  • Debt Consolidation Loans – Refinance merchant cash advances, short-term business loans, high interest business loans, daily or weekly payment loans or business credit cards.
  • Commercial Real Estate – Refinance an existing commercial real estate mortgage, buy an office building or other owner-occupied commercial space.

For in-depth information about the popular SBA 7(a) loan program, visit the SmartBiz Small Business blog and review our comprehensive article: What is an SBA Loan?

The 504 Loan Program

This program was created to give small businesses low cost funds for expansion or modernization. Typically, up to 50% of project costs are funded by a lender backed by the SBA. CDCs (Community Development Corporations) usually fund up to 40% of the project cost. The final 10% is a cash down payment expected to come from the small business owner.

A 504 SBA loan might be a good fit for small business owners interested in purchasing a commercial real estate property and if their unique business circumstances fit with the public policy goals of the local California CDC. To find your local CDC, visit the SBA website here.

The Microloan Program

The Microloan Program is for very small businesses, including start-ups and provides loans of up to $50,000. Requirements to qualify for a microloan can vary depending on the lender. Proceeds from an SBA Microloan can be used for most business expenses but not for paying down debt or real estate purchases.

Non-SBA Loans in California

There are plenty of non-SBA loan options available in California although they may have higher rates, shorter terms and larger payments. They include:

  • Business Lines of Credit

A business line of credit allows you to borrow funds up to a limit based on your credit, typically smaller than a term loan. You only pay interest on the amount you use, and you can continue borrowing as necessary until you reach the set maximum. These loans are usually unsecured, meaning that you won’t have to provide collateral to qualify. For in-depth information, read this post from the SmartBiz Blog: Small Business Lines of Credit Pros and Cons.

Business credit cards are revolving lines of credit. The main distinction is that they don’t terminate once the predetermined limit is reached. They function like personal credit cards, with varying spending rewards and offers depending on the lender. Learn more here: 5 Business Credit Card Myths.

  • Merchant Cash Advances

A merchant cash advance (MCA) is most often used by small businesses that accept credit and debit card sales. You receive a specific sum in advance that is repaid either by a percent deduction from daily transactions or through daily or weekly payments.

Keep in mind that MCAs often lead to extremely high annual percentage rates. Even the minimum within the range can be several times larger than term loan annual percentage rates. Some APRs can reach up to well over 300%. For more info, read What You Need to Know About an MCA.

Bank Term Loans

If your business isn’t quite ready for an SBA loan, or need funds more quickly than an SBA loan, consider applying for a bank term loan. SmartBiz currently offers term loans through its bank partners for working capital, debt refinance and new equipment purchase:

  • $30,000 to $200,000 loan amounts
  • 2 – 5 year repayment terms
  • Fixed interest rate*
  • Monthly repayments
  • No pre-payment penalties

*Interest rate depends on loan term and the applicant's credit and financial profile.

See if you pre-qualify

Advantages of SBA 7(a) Loans in California

SBA 7(a) loans are known as the “gold standard” in small business funding and are available nationwide. An SBA 7(a) loan has several advantages compared to other options including:

  • Low interest rates
  • Long terms
  • Very low monthly payments
  • Available for many uses
  • Can help build business credit
  • No prepayment penalty
  • Available nationwide

Read why SBA loans are so popular on the SmartBiz website here.

Requirements to apply for an SBA 7(a) loan in California

Lenders and loan programs have unique eligibility requirements for an SBA loan. For example, some lenders may require a business plan while others do not. (SmartBiz Loans does not require a business plan). Requirements for an SBA loan facilitated by SmartBiz include:

  • Time in business must be above 2 years
  • Business owner’s personal credit score must be above 650
  • The business must be U.S. based and owned by US citizen or Lawful Permanent Resident who is at least 21-years old
  • No outstanding tax liens
  • No bankruptcies or foreclosures in the past 3 years
  • No recent charge-offs or settlements
  • Current on government-related loans

How to apply for an SBA 7(a) loan in California

Step 1: Check your eligibility. Before you even begin your application, make sure your business is eligible. Visit the SBA website for a list of eligible businesses. You must also meet the requirements listed above.

Step 2: Review requirements and gather paperwork. The more organized you are, the swifter the application process will move. For a list of documents required for an SBA loan, visit the SmartBiz Blog. How to Get an SBA Loan: Documents You Need

Step 3: Choose a lender. Although SmartBiz Loans is not a lender, we work with multiple banks to match you with the lender most likely to fund. You won’t waste valuable time going from bank to bank. This video has step-by-step information about how to get an SBA loan:



When you work with SmartBiz Loans, expert support is available. Our loan consultants can answer any questions that might come up during the loan process. To read 5-star reviews about our customer service, visit Google Reviews, the Consumer Affairs website or the SmartBiz Loans TrustPilot page.

Discover if you’re prequalified for a low-cost SBA loan in minutes without impacting your credit score here.

See if you pre-qualify