California’s economy is massive, with a gross state product of 3 trillion and larger than most countries in the world. California is ranked as 5th largest economy in the world and is the home to 3 of the world’s ten largest companies by marketization. With such large economic development, California small businesses can capitalize on such a large market and workforce. California usually accounts for three-quarters of all U.S. job creation with access to many different types of workers.   

With all that California small businesses have going for them in the state, small businesses still have the same challenges and limited resources to acquire a small business loan from a bank. Getting a small business loan from traditional banks like Wells Fargo, Bank of America, or Chase Bank will be challenging due to their strict business loan requirements. AdvancePoint Capital has the resources of a full marketplace of funding alternatives for small businesses.

The 9 Best Business Loan Options and Resources for California Businesses

1. Long-Term Small Business Loans for a California Small Business

Long-term business loans have a duration of greater than two years and charge principal and interest. The loan does not function like a line of credit where you can draw funds as you go. Long-term business loans are predominantly for expansion and growth or to finance large long-term business projects.

Product Overview

Rates: Interest rates starting at 6.50% or treasury index plus 1% to 2.5%

Terms: 2 to 10 years

Fees: 0% to 3% Origination fees

Payments: Monthly or bi-weekly payments

Credit Standards: Lender will consider all credit types

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2. Business Line of Credit for a California Small Business

A Business line of credit is an open form of financing that is revolving. It is a flexible financing product that allows business owners to draw funds on demand or to make purchases. A business line of credit charges a principal and interest rate but has a limit that cannot be exceeded without permission and approval of the lender. Renewal is required either semi-annually or annually to be extended. A business line of credit typically has a personal loan guarantee.

Product Overview

Rates: Interest rates starting at 6.50% or treasury index plus 1% to 2.5%

Terms: Open revolving line

Fees: 0% to 3% Origination fees

Payments: Monthly, bi-weekly or weekly payments

Credit Standards: Lender will consider all types. Good to excellent preferred.

3. Short-Term Small Business Loans for a California Small Business

Short-term business loans are typically repaid with 6 to 18 months. Small businesses choose this when traditional business loan financing is not an option due to qualifications. A lump sum of money is provided upfront with a fixed payback amount calculated using a “factor rate” over a short term of time. This option is popular with small business owners because of the reduced documentation requirements and credit tolerances that are laxer than traditional business loan financing.

Product Overview

Rates: Factors based on the loan amount range from 1.09% up to 1.45%

Terms: 6 to 18 months in duration (typically 12 months or less)

Fees: Business funder may charge 0% to 5% origination fees

Payments: Weekly, bi-weekly and in some cases daily 

Credit Standards: All types considered

4. Small Business Cash Advance for a California Small Business

Business cash advances (BCA) are also known as a purchase of future sales agreement. The owner is advanced money from future sales and is responsible for paying back a fixed amount, which is greater than the amount that was advanced. This difference between the advance amount and the payback amount is called the “factor rate or cost.” The advance is repaid by taking a fixed percentage (specified percentage) of future overall sales deposits. The payments are collected by an ACH fixed daily or weekly from the bank account based on the specified percentage of future sales. 

At the end of every month, reconciliation can occur if the fixed payments taken are more than the set future percentage of sales. The small business owner can request a refund back for overpayment so that the set specified percentage of sales matches the sales volumes. Repayment continues until the payback amount is paid back in full. There is no term limit for business cash advances because of fluctuating future sales. A business cash advance is not considered a business loan, but an advance on future sales. Business owners are not required to provide a personal loan guarantee for a business cash advance.

Product Overview

Rate: 1.09% up to 1.45% factors

Terms: No term limits. Collection time frame is dependent on future sales

Fees: Origination fees range from 0% to 5%

Payments: Weekly or daily 

Credit Standards: All credit considered

5. Merchant Cash Advance for a California Small Business

Merchant cash advances (MCA) are also a type of purchase of future sales agreement. They are very similar to business cash advances, but the biggest difference is the repayment process which is connected to the future credit card sales instead of overall sales. MCA’s take a set percentage of future credit card sales at the time of batch until the advance is paid back in full. Businesses appreciate MCA because they have fluctuating sales and don’t want to be locked into a fixed payment that could negatively impact capital or margins of profit if sales decline. Merchant cash advances are not considered a loan, but an advance of future sales. There is no personal loan guarantee with a merchant cash advance.

Product Overview

Rates: Factors that range from 1.09% up to 1.45%

Terms: No term limits (payoff depends on future sales)

Fees: Origination fees that range from 0% to 3%

Payments: Fixed percentage of future credit card sales withdrawn at the time of batch

Credit Standards: Poor to excellent is accepted, all types considered

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6. Equipment Financing for a California Small Business

Small business owners that rely on equipment to operate their business turn to equipment loans for the purchase of equipment that secures the equipment as collateral. The business owner must have a favorable credit history to acquire equipment loans, but limited paperwork is necessary to get approved.

Product Overview

Rates: Interest from treasury index plus 2% interest rate or 1.09% up to 1.45% Factors

Terms: 2 to 7 years

Fees: Lender may charge origination fees ranging from 1% to 3%

Payments: Weekly or daily 

Credit Standards: Fair to excellent accepted.

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7. Small Business Administration (SBA) Loans for a California Small Business

The Small Business Administration (SBA) provides loan programs, guidelines, and is a business loan guarantee program to approved lenders. The mission of the SBA is to foster small business economic development. The Small Business Administration is not a lender. They provide guarantees to an approved business lender to recover a certain percentage of the business loan if it were to default with SBA rights reserved. The business loan guarantee program gives the approved lender the ability to take on the risk of business lending under SBA. Without that loan guarantee and the SBA rights reserved, the approved lender would not ordinarily lend on their own. 

SBA programs are highly sought out by small business owners, but unfortunately, SBA loans have low application approvals due to the requirements, guidelines, and high credit standards. The Small Business Administration loan will require a personal loan guarantee.

The Small Business Administration (SBA) has come out with a new loan program for small businesses called the SBA Paycheck Protection Plan (PPP) loan to small businesses in response to COVID-19. Please contact AdvancePoint Capital for help and more details to see if your business is eligible.

Product Overview

Rates: Interest rates starting around 6.00%, treasury index plus 1% to 2.5%

Terms: 3 to 25 years

Fees: Lender may charge origination fees ranging from 1% to 3%

Payments: Fixed monthly payments

Credit Standards: Good to excellent preferred, all credit considered

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8. Invoice Financing for a California Small Business

Invoice financing offers the ability to get an advance on invoices that have been issued to clients but not collected. This solution provides cash quick to small businesses that want to avoid the wait for outstanding invoices to be paid by the client. Invoice financing costs range from 1% to 2.5% fee off of the face value of the invoice advanced. This is not considered a loan, but an advance of funds.

Product Overview

Rates: None

Terms: Advance

Fees: 1% to 3% fee based on the invoice. Monthly service fees depending on the volume of invoices factored

Credit Standards: Clients being invoiced need favorable credit NOT the owner creating the invoices

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9. Purchase Order Financing for a California Small Business

Purchase order financing offers the ability to raise capital to pay suppliers upfront for verified purchase orders. Purchase order loans will finance an entire order or a portion of it, depending on the finance company. When the supplier is ready to ship the order, the purchase order financing company collects payment directly from the customer. The purchase order finance company will subtract their fees and then send the balance of the invoice to your business. This not considered a loan but an advance of funds.

Product Overview

Rates: None

Terms: No term limits as it is not a business loan

Fees: 1% to 3% fee for each purchase order

Credit Standards: All parties need favorable history but all credit considered

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The fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form.

Frequently Asked Questions

Why Do You Need a Business Loan? 

The most common reasons that small businesses use loan include: 

  • Working Capital        
  • Equipment        
  • Expansion        
  • Cash Flow Shortages        
  • Emergencies        
  • Advertising or Marketing        
  • Debt Refinancing        
  • Inventory        
  • Operations        
  • Employees        
  • Manufacturing        
  • Furniture   
  • Operation needs
  • Employees
  • Real Estate Acquisition
  • Transportation Development

Are Small Business Loans Difficult to Obtain in California?

It is not difficult for small businesses to obtain business financing. 

Can I Qualify for a Small Business Loan if I Have Bad Credit?

California small business owners with bad credit have many options available to them. Products will vary depending on the different levels of bad credit, financial conditions, and the most recent cash flow.

Can I Get a Small Business Loan with No Documents?

Reduced documentation business funding is available and may work for you if you are trying to avoid providing a lot of documentation. Business financing products will be less favorable, the less documentation you provide. 

What Are the Most Populous Areas of California?  

California is the most populous U.S. state and the third-largest by area, with 39.5 million residents across a total region of about 163,696 square miles. The greater Los Angeles area is the nation’s second-most populous urban region with 18 million residents. Many people choose the Los Angeles and surrounding counties (including San Bernardino) for the overall quality of life as well as the economic development and jobs. San Francisco is the fifth most populous region, with 9 million residents. San Diego, California, is the 8th largest city and second-largest in the state, with over 1.5 million in population. San Diego has a diverse blend of industry that follows the same makeup of the rest of the state of California.

Can I Get a Start-Up Business Loan? 

Getting a start-up business loan can be difficult and challenging. Other than SBA, your search will need to include looking at non-traditional means to raise capital to start a business (for example, private sources or investors).

Does the Los Angeles, California Area Have Any Unique Issues Related To Getting a Loan for a Small Business? 

Los Angeles, California does have higher defaults for small business loans, and some lenders take a harder look at qualifications if small businesses are located in Los Angeles County. Some theorize that the higher rate of default in Los Angeles is related to a large population of first-generation immigrants, which may lack the financial education necessary to handle and understand the business funding process and available loan options. 

Are California Non-Profit Small Businesses Able to Get a Small Business Loan for There Operations?

Yes, many financing products are open to nonprofits. 

Are All Partners, Members, or Owners Required to Sign for a Business Loan?

Most financing products require the majority (over 50%) of owner participation and signature. 

Why AdvancePoint Capital for a Small Business Loan in California?

AdvancePoint Capital has the resources, experience, and access to a large small business finance center marketplace with a variety of product offerings to help borrowers. We guide, provide, and serve the needs of every borrower, no matter what the industry, community, language (including Spanish), revenue, or income communities. We serve all applicants with a range of loan amounts. Let AdvancePoint Capital help your business make smart funding decisions using our simple application process. We view the customer relationship as a partnership. We have the resources to help small businesses compare, shop, and save to get the right result and make the right loan program decision. We encourage business owners to check out our reviews on Google and the Better Business Bureau. 

Where Do California Small Business Owners Apply for a Small Business Loan? 

Businesses will find applying for a loan with AdvancePoint Capital is as simple as 1, 2, 3. Start with this website online form (don’t forget to provide your name and e-mail), then fill out the short application page, wait a few hours for your approval, and then get your money for your business.

The Bottom Line: Advice, Tips, and Warnings About Small Business Loans. How to Choose the Right Small Business Loan Program

Small businesses should always start the loan search by asking the questions: 

  • What is the purpose of the money for the business? 
  • Do you know what obstacles you may face when trying to get your business approved? 
  • Have you been provided all business loan options and resources available in the business financing marketplace? 
  • Have you checked out reviews of the business lender you are choosing to work with? Always do a cost versus benefit analysis when choosing a business funding option.

AdvancePoint Capital

The fast, convenient, and straightforward way to get the business loan you need for your business – now!
Get your quote today by filling out our simple form.
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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.