In California, small businesses have a valuable ally in the form of the California State Small Business Loan Guarantee Program. This program is designed to help small business owners access the financial support they need to grow and thrive.
If you’re just starting a business or you already own one. Understanding the ins and outs of this program can be a game-changer for your enterprise. Learn more about this program so you can make the best device for your business financial future!
What is the California State Small Business Loan Guarantee Program?
The California State Small Business Loan Guarantee Program is a program to help small businesses by making it safer for banks and credit unions to lend them money. It’s run by the iBank Small Business Finance Center and seven Financial Development Corporations (FDCs).
You can use the loan for various purposes like starting a business, growing it, buying inventory, doing construction, farming, dealing with disasters, or supporting exports. In addition, it can also be used for day-to-day business expenses.
You can borrow as much as $5 million, but the program will only guarantee up to 80% of what you borrow. Each FDC has its own rules for who can get a loan, so make sure to find the best fit for your needs.
Usually, you’ll have at least seven years to pay back the loan. Furthermore, the interest rates will depend on the lender you choose to work with. The program is open to many types of small businesses such as:
- Companies.
- Partnerships.
- Businesses run by one person.
Loan Requirements
Below are some loan requirements for this program.
- Loan Amounts: The loan size ranges from $1,000,000 to $20,000,000.
- Term Loans: These loans are for long-term financial needs (look at “Permissible Use of Loan Proceeds” below for details).
- Commercial Real Estate Loans (must be at least 51% owner occupied): The program can guarantee loans for up to seven years, and the loan terms can be even longer.
- Line of Credit (at lender term): These are for financing things like receivables and short-term working capital needs.
- Micro-Loans Available: Small loans starting at $25,000.
- Max Guarantee: The program can guarantee up to 80% of the loan amount or $1 million (whichever is less) for each business, including its affiliates.
- The money from the loan must be used within the state of California.
- The bank decides how the loan will work and sets the interest rate.
Business Requirements
For the business, there are some requirements for applying for this program such as:
- The business should have between 1 and 750 employees.
- This type of business must be allowed in the program, and it should be in one of the industries listed in the North American Industry Classification System (NAICS) code list. (You can find the list at www.census.gov/eos/www/naics/)
- Eligible types of small business entities include:
- Sole Proprietor: An individual using their legal name as their business name, and they file certain tax forms or have a business name statement.
- Limited Liability Company
- Cooperative
- Corporation
- Partnership
- S-Corporation
- Not-for-profit organizations
How to Apply for the California State Small Business Loan Guarantee Program?
If you want to apply for the California State Small Business Loan Guarantee Program, please follow these steps:
1. Get Your Business Plan Ready
First, make a clear and well-organized plan for your business. Write down what you want your business to achieve, how you’ll use the loan, and how it will help your business grow.
2. Find the Right Lender
The next step is you need to work with a special kind of bank or credit union. They are the ones that have experience with this program and can help you with the application process.
3. Fill Out the Application
Third, your chosen lender will give you a form to fill out. It’s like paperwork where you provide detailed info about your business, your financial history, and how you’ll use the loan.
4. Visit the California Infrastructure and Economic Development Bank (iBank) Official Website
While you can’t directly apply for a loan on their website, the iBank’s website on ibank.ca.gov can provide you with valuable information and resources about the program.
5. Collect Important Papers
Be ready to hand in certain documents. This can include things like financial statements (papers about your money), tax records, business licenses, and anything else the lender asks for.
6. Make Sure Your Business Qualifies
Then, check if your business meets the program’s rules. For example, you should have the right number of employees and be in the type of business that’s allowed in the program.
7. Work with Your Lender
Next, you should work with your lender because they will help you through the application process. They’ll decide if your business can use this program.
8. Understanding Loan Terms
If your application gets the green light, you’ll get a loan agreement. This paper will show the interest rate (how much extra you pay) and when you need to pay back the loan. Read it carefully, and if everything looks good, sign the agreement.
9. Waiting for Approval
Your lender will send your application to the California State Small Business Loan Guarantee Program. This part might take some time, so be patient.
10. Get the Money
Finally, once your application gets approved, you’ll receive the loan funds. Therefore, you can use the money according to your business plan.
Remember, the rules and steps might be a little different depending on the bank and where your business is. So, it’s a good idea to talk to your chosen bank and the Financial Development Corporation (FDC) in your area for the most up-to-date and correct information on how to apply.
Apply Now for the California State Small Business Loan Guarantee Program!
If you’re a small business owner in California seeking financial support to realize your entrepreneurial dreams. The California State Small Business Loan Guarantee Program is your opportunity to make it happen.
With the backing of this program, you can access the funds needed to start, expand, or strengthen your business, all while enjoying the benefits of reduced risk for both you and your lender. Don’t forget to grab this opportunity to make your business much better!
