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2022 Guide to Small Business Funding in California

Since 2020 the state of California has offered small businesses of all types of solutions for navigating their recovery from the COVID-19 pandemic. These options range from grants to existing disaster loans and entirely new loan options. Moreover, California’s strict lending policies make the state one of the best in the nation for exploring options outside of the traditional loan process. Now small business owners looking for growth and resources have much more to rely on than credit cards and business lines of credit. Here is everything business owners need to know about getting funding in California.

Your California State and Local Small Business Funding Guide

It’s been two years since the COVID-19 pandemic started. Today, California has proven its track record for protecting small businesses while supplying them with the resources and funding needed to succeed.

As of December 2021, the unemployment rate had decreased to 6.5%, down from 15.5% in 2020. And, California has regained nearly 90 percent of the non-farm jobs lost during March and April of 2020. Enterprises with fewer than 20 employees remain the largest share of small business employers. While accommodation and food service, health care, professional services, and construction remain the largest industries for small business.

One of the greatest assets that California small business owners have is Senate Bill 1235. Passed in October 2018, this bill guaranteed transparency to borrowers looking for financing across all types of loan products. By protecting transparency in lending agreements, Senate Bill 1235 made California one of the best states for small businesses.

In addition, IBank, or California Infrastructure and Economic Development Bank used its existing infrastructure to support needed COVID-19 response. IBank’s statewide programs and funding of Small Business Finance Center (SBFC) proved to be California’s springboard to economic recovery.

Now as more business owners look to grow from surviving the pandemic to navigating inflation risks, or expanding a thriving operation, there are more options available than ever.

Here is our guide on where small business borrowers can get funding and how to use those funds once they are received.

What will this guide cover?

In this guide, we will be discussing several common professions and the types of loans that are most relevant to their business needs. We will specifically be covering:

How to be successful with business funding

Using business funding successfully is often the product of good planning. Get your business prepared to take outside funding by answering four quick questions.

  • How much money is owed to your business (accounts receivable)?
  • How much money does your business owe (accounts payable)?
  • How and when does your business recognize its costs and revenue?
  • What are your short-term and long-term financial goals for your business?

Once you have confirmed your business plan and your business needs, its financial capacity, and goals, deciding the type of funding your business needs will be easy. In general, there are two types of business funding – short-term and long-term business financing.

Short-Term Funding

Short-term funding is used to help businesses meet their short-term financial obligations or to take advantage of immediate financial opportunities. Typically, the time allowed to repay a short-term loan is 12 months or less but may extend up to three years.

Examples of short-term business funding include commercial bridge loans, working capital, commercial real estate, invoice, and inventory financing, among others.

Short-term business funding options differ most from longer-term financing in that they are often dedicated to a specific use or may be tied to strict repayment terms. In general, the narrow application of funds allows lenders to more effectively evaluate the business’s ability to repay the requested loan. In turn these specialized short-term products can meet the needs of more businesses.

Short-term business funding is most often provided by alternative and online small business lenders. These lenders typically are not depository institutions. Rather than function as a bank that gives loans, they operate as small business loan specialists. Specialized evaluation criteria used by these lenders means the funding solutions can be more flexible and easier to access for businesses with less than perfect financial history.

Short-term lending can be a good fit if your business needs to increase cash flow quickly. Alternative and online small business lenders often have shorter applications and can be more efficient with their evaluation and underwriting processes.

Borrowers should consider all their financial options and financial capacity before seeking outside funding. Short-term funding solutions often come with more strict repayment plans, collateral, or higher interest rates. To successfully use short-term funding options businesses should be prepared to make relatively larger payments in a shorter amount of time.

In the end, this practice can get your business the funding it needs when it needs it while progressing faster toward decreasing business debt.

To learn more about short-term funding for small businesses, check out this in-depth article from Biz2Credit.

Long-Term Funding

Long-term business funding is used to help a business meet its long-term financial goals. In general, these loans have repayment terms between 3 and 10 years. Long-term financial products are often associated with more traditional banking options, and include bank loans, term loans, and line-of-credit loans.

Typical long-term small business loans have similar characteristics including predetermined repayment periods (loan term), use of interest rates, and more strict lending criteria. SBA guaranteed loans and bank loans used to start a business, to pay for fixed assets, or ongoing operational costs are all examples of long-term funding and how it can be used.

With the repayment period for some long-term business loans lasting up to 25 years, businesses should evaluate their longer-term financial goals and strategy before seeking this type of business funding.

Fixed assets that may be worth taking out a long-term loan include property or equipment used to perform business functions. Additionally, operational costs might include the costs associated with the production or transportation of goods provided by your business. While operational costs are often met with short-term loans, they may also be provided for by line-of-credit loans.

Longer-term business loans are often provided by depository lenders or banks. These loans generally have longer application processes, are intended for larger sums of money and may be harder to qualify for.

To make traditional business funding available to a larger group of small businesses, digital lenders have begun lending term loans and other more traditional financial products. These offerings balanced with a more detailed evaluation of business performance is giving many small businesses greater options when it comes to funding.

To learn more about long-term funding for small businesses, check out this in-depth article from Biz2Credit.

Documentation Needed to get a Small Business Loan in California

What documentation is required to apply for a small business loan?

The exact documentation needed to apply for a business loan will depend on the lender, their criteria and the type of business loan being applied for. However, general eligibility requirements apply to most funding options.

Business owners can expect to complete a loan application, provide credit history, and show proof of the business’s financial performance. While a credit report will be required in any application, eligibility will vary based on where you borrow, your balance sheet and whether or not you have business assets to use as collateral.

Here’s a list of documents that your small business may need:

  • Completed loan application
  • Background information of borrower(s)
  • Value of property or asset (if applicable)
  • Business credit score
  • Personal credit score
  • Financial statements including annual revenue
  • Sources and uses of funds
  • Business liabilities or expenses
  • Business bank account statement
  • Business tax information
  • Proof of insurance

California’s Top Business Funding Options in 2022

The small business resources, funding, and grants in this section are provided statewide across California through a combination of state organizations and public-private loan programs.

Top 4 funding opportunities in California

SBFC Loan Funding Program

The Loan Guarantee Program provided by iBank is among the best and most sought-after funding options available to California small businesses.

The program was built to help small businesses that face barriers to accessing outside funding. To date, the fund has helped create or retain 412,000 jobs and in 2021 provided more than $229 million to small businesses across California.

The Loan Guarantee Program helps lenders provide lower rates by guaranteeing 80-95% of the loan. The loans are available to small businesses and non-profits. The maximum loan amount through this program is $20 million. But the program will only guarantee up to $2.5 million.

Funds for the Loan Guarantee Program are distributed by a network of lenders. Eligibility criteria may vary between lenders.

To learn if your small business qualifies, you can apply directly through a California FDC.

California Rebuilding Fund

The California Rebuilding Fund was created specifically to help small businesses recover from the impact of COVID-19 health and safety restrictions. The Rebuilding Fund is financed by public private partnerships with a network of lenders that borrowing businesses may be matched with. iBank made an initial investment in the Rebuilding Fund of $25 million. These funds guarantee the loan for small business lenders, helping them to lend more to more businesses.

The California Rebuilding Fund offers business owners a streamlined application process through a central online portal. Once here the borrower can complete a pre-application to check for eligibility. When loan eligibility is confirmed, borrowers are matched with local lenders to formally apply and receive financing.

If your business is approved and matched with a lender you will need to provide the following documents.

  • Most recently filed federal tax returns (business and personal), if available, and required by the lender.
  • Bank statements, internal financial statements or other proof of revenue (including year-to-date financial statements);
  • Schedule of ownership including percentage ownership, and a photo ID for any owners with more than 20% ownership
  • Brief description of COVID-19 impacts on jobs and financial statements that show loss of revenue
  • Evidence of legal formation and business license
  • Copy of lease agreement (if applicable)

For more information about the California Rebuilding Loan Fund, eligibility, and application details, please visit

Disaster Relief Loan Guarantee Program

The Disaster Relief Loan Guarantee Program is another funding option provided by the iBank Small Business Finance Center. The Disaster Relief Loan Guarantee Program is structured to help small businesses that suffered the economic impacts of COVID-19.

The Program was built as a type of gap financing for businesses that face limited access or may not qualify for federal disaster funds. In addition, the program funds are made available to businesses in immigrant and low-wealth communities.

Eligible small businesses include those located in California and with 1-750 employees. Small businesses and nonprofits who have been negatively impacted by COVID-19 may be eligible for the disaster relief loan guarantee program. It is important to know that the loan may be guaranteed for up to 7 years and cover 95% of the loan.

Like other iBank loan programs, the lending partner may vary, and individual lenders set the qualifications for these loans. If approved, the business will have the opportunity to negotiate interest rate and loan term. Capital provided by the Disaster Relief Loan Guarantee Program must be used to continue running the business or to restore the “economic injury” caused by the pandemic.

Your small business can learn more and apply for the Disaster Relief Loan Program at

California Capital Access Program (CalCap)

The California Capital Access Program (CalCap) encourages lenders to provide loans to businesses that may otherwise face limitation to accessing the funds they need.

The CalCap Loan Loss Reserve Program protects lenders from losses when making certain small business loans. If your small business needs a loan to help cover start up costs, expansion or working capital, you may receive better rates and loan terms if your business is enrolled in the program.

The CalCap Loan Loss Reserve Program is administered by the California Pollution Control Financing Agency within the Treasurers Office and is provided by California Capital Access Program for Small Business (CalCAP SB).

CalCap supports lenders that make loans to more small businesses by funding a loan loss reserve. The reserve offers lenders security of up to 100% of the loan amount when facing losses or loan defaults.

For more information and to find a lender that participates in the CalCAP SB Program, please visit

Best Grants in California

SoGal Black Founder Startup Grant

The SoGal Black Founder Startup Grant awards up to $10,000 to Black women or Black nonbinary entrepreneurs. Those seeking this grant can apply at any time as submissions are accepted on an ongoing or rolling basis.

To qualify founders must have a scalable business and offer a high-impact solution or idea. The business should also have plans for seeking a financial investor. To learn more founders can visit the SoGal website.

California Dream Fund

The California Dream Fund offers new businesses and startups micro grants of up to $10,000.

Administered by the California Office of Small Business Advocate, the fund is a $35 million program build to support the state’s new businesses.

This program is brand new, having launched in early 2022. Eligible businesses are entered into a training and consultation program. Following completion of this program the new businesses are awarded their grant money. The Dream Fund has program centers across all regions of California.

For more details on the California Dream Fund visit their resources page.

Social Entrepreneurs for Economic Development

Social Entrepreneurs for Economic Development (SEED) is a grant program administer by the state of California. The Grant is targeted to provide funds to disadvantaged communities, immigrants and other individuals who have limited English Language proficiency.

Eligible businesses should address a social problem or community need. The deadline for the latest funding round was February 8. However, this program will continue. Now is a great time to prepare for the next round of submissions.

To learn more, visit the SEED Grant website.

Small Business Administration Resources in California

The U.S. Small Business Administration is a national government agency that is built to support entrepreneurs and their new or existing businesses. SBA services are free to use and are often provided through community small business development centers or banking and lending partners.

In New York State the SBA can help small business owners with business management, financial planning and find access to SBA loans and SBA microloans. Find a full list of SBA resources New York District Office Resources webpage.

Online Lenders

Online lenders like Biz2Credit can offer small businesses faster application and underwriting processes, decreasing the time it takes to receive funding.

Founded in 2007, Biz2Credit has grown to help small businesses of all sizes get the funding they need to maintain operations and grow. By the end of the Paycheck Protection Program in 2021 Biz2credit was the 7th largest lender, by loan amounts provided, and the largest fintech provider of those loans.

Biz2Credit’s funding platform matches small businesses to the best sources of capital based on each company’s unique profile. Completed in just a few minutes, the process is built to be secure, efficient, and transparent. Funding options provided give a range of loan payment terms based on eligibility. Biz2Credit funding products include working capital, commercial real estate, and term loans.

Getting Started with Small Business Loans in California

You’ve made it through the 2022 guide to small business funding in California. Reaching your small business goals and attaining the funding you need is just a matter of getting started.

Small businesses in California have several funding options available to them, ranging from traditional bank loans to specific bridge loans or merchant cash advances that may help your business meet particular short-term financing needs. With help from Senate Bill 1235, business owners can access transparent funding options from online lenders. Online lenders, dedicated to business funding, are a good way for your business to access the funds it needs when faced with financial challenges or time constraints.

In all cases, the best strategy for funding your small business is to be prepared with a plan for both your short-term and long-term financial goals. Business owners can expect application processes and underwriting to become longer or stricter as their financial ambitions grow larger.

Business owners should consider all their options before choosing this next step toward financial growth. Evaluate options specific to your state, region, and trade to find the best business financing option for you.