Commercial Financial Institutions
The best chances for obtaining commercial loans are through in-country financial institutions or their overseas branch offices or affiliates with which a business already has an account and/or relationship. CalBIS does not provide guidance on obtaining commercial loans; however, CalBIS can assist companies in identifying California offices of foreign financial institutions.
The benefits, risks, sources and guides to obtaining venture capital are widely documented. For starters, a great amount of information can be found at a local bookstore about the possibilities, application processes, and publications that list sources of venture capital. CalBIS does not provide guidance on obtaining venture capital.
Several state-sponsored financial assistance programs are available to firms locating, expanding or modernizing facilities in California. The types of assistance available can be grouped into three broad categories:
Business financing is provided directly to companies in order to undertake various projects. Each program has its own specific requirements for qualification and terms for approval. Financing is available in the form of industrial development bonds, small business loan guarantees and export finance loan guarantees, among others.
Environmental loans reflect California’s commitment to the preservation of the environment. The state has implemented various loan programs to help companies clean up the environment and implement environmentally friendly programs. The loan proceeds are used for such things as replacing or upgrading underground petroleum tanks, reducing hazardous waste and recycling.
Public infrastructure financing
Public infrastructure financing provides financial assistance to cities and counties for public infrastructure projects. Although not directly available to individual businesses, cities and counties can obtain public infrastructure financing that benefits qualified businesses locating in their areas.
California Small Business Loan Guarantee
The Small Business Loan Guarantee Program allows a business to not only acquire a loan it could not otherwise obtain, but to establish a favorable credit history with a lender so that the business may obtain future financing on its own.
Any small business as defined by the U.S Small Business Administration (typically businesses that employ one hundred people or less).
Proceeds must be used primarily in California and for any standard business purpose beneficial to the applicant’s business, such as expansion into new facilities or purchase of new equipment.
Guarantees can cover up to 90 percent of the loan amount, with the guaranteed portion of the loan not exceeding $500,000. The guaranteed percentage varies and subject to negotiation between the Financial Development Corporation (FDC) and the lender.
The term of the loan guarantee may extend up to seven years.
- Interest rates are negotiated between the borrower and the lender. The FDC may charge a guarantee fee of up to 2 percent for guarantee amounts up to $150,000, and 3 percent for guarantee amounts over $150,000, plus a documentation fee.
- Processing time takes three to five weeks, depending on how quickly the applicant provides the necessary information and documentation, and on the lender’s responsiveness.
- Collateral is generally required, but each transaction is tailored to meet the borrower’s financial situation.