California owners of small and medium-sized businesses sometimes need to obtain financing to keep moving forward. Likewise, SMBs are interested in finding the best working capital instrument to sustain growth. They want a financial partnership to reap huge rewards by maximizing their return on investment.
Upon reviewing data regarding lender requirements and snapshot comparisons of banks, fintechs, and credit unions in California, SMBs should know whether pursuing financing is a good alternative for their businesses.
How Do Small Business Loans Work?
On average, small business loans range in size from $5,000 to $400,000+. Lender requirements vary regarding the required supporting documents, terms, collateral, and charges for interest rates and fees along with how you can use borrowed funds.
Lenders consider these factors to determine loan approval or denial:
- Years in operation
- Revenue and cash flow
- Credit history
- Total debt
- Risk level
- Whether collateral is required
The Best Small Business Loans in California
Banks
- Wells Fargo: Unsecured business loans from $10,000 to $100,000, 1-5 year terms, no collateral, no prepayment fee. Fixed rates start at 6.25%, no opening fee. Loan usage: business expansion, remodels, emergency repairs. Customers may qualify for discounts but higher credit scores may be required to secure loans.
- OneWest Bank: Working capital loans up to $250,000 for 6-18 months, rates as low as 9.99%, same day funding available. Equipment financing up to $500,000 for 6-72 months, rates as low as 5.99%, funding as fast as one day.
- U.S. Bank: Quick, term, equipment, and express loans for loan amounts up to $1 million. Competitive rates, flexible terms and collateral options. Fund usage varies: General business needs, equipment and vehicle purchases, working capital, and business expansion. Fixed monthly payments but business owners may not want to offer collateral.
Fintechs and Online Lenders
- Camino Financial: Loans range between $5,000 to $400,000, fixed interest rates 12%-40%, terms 24-60 months, 5% origination fee of loan amount, 2-10 days from application to funding. No early payment penalty, no collateral, and previous credit history not required. It offers bilingual customer service.
- Working Solutions: Standard loans available from $5,000 to $50,000, 3-5 year loan terms, 9%-11%, minimal application, closing, and filing fees, applicants must operate in Bay area counties, be current on debt, no minimum revenue or credit score. Easy application process but start-ups must have a secondary income source.
- Accion Rapid Loan: Loans from $300-$8,000, terms up to 36 months, 14%-18% fixed simple interest, no prepayment penalty. Business must be a legal entity and operate in specific California counties. Veterans receive a 1% discount but applicants must have a minimum credit score of 550.
Credit Unions
- Los Angeles Federal Credit Union: Loan amount range: $20,000 to $5 million, 48-hour pre-qualification, no application fee. Fund usage: advertising, purchase inventory, equipment or business vehicle, expand the business. More personalized services compared to national banks but may have fewer borrowing options.
- E-Central Credit Union: SBA loans up to $5 million, loan terms up to 10 years for working capital, equipment and inventory, fixed and variable rates. Government-sponsored loans increase the opportunity for loan approval but E-Central requires a 10% down payment.
- Orange County’s Credit Union: Loans for $10,000+ for business equipment and vehicles, terms 12-72 months, fixed and variable rates. Funds limited to equipment and vehicle purchases but fixed monthly payments help borrowers plan their budgets.
Don’t Hesitate to Apply for a Small Business Loan
The best small business loan for your business is the one that will help you reach your goals and sustain growth. Securing financing seems scary until you compare and weigh a lender’s advantages and disadvantages to determine the right one for your business.
A small business loan builds credit for your business’s future, allows you to expand to a second location or upgrade your existing one, and stay competitive in your industry. Make sure you narrow down your choices, choose the best small business loan, and apply for financing today. Doing so could mean the difference between whether your business stagnates or you set the stage for better things to come.