2 Main types of federal loans for small business in the state of California

If you are a small business owner and reside in the state of California, then you can opt for federal business loan. Mainly there are two federal business loans in the state of California - California Capital Access Program (CalCAP) and the Small Business Loan Guarantee Program (SBLGP). Though these two programs have slowed down in recent times due to budgetary cuts, but still these two programs play vital role in the state. Now here we discuss about these two programs.

California Capital Access Program

California Capital Access Program aims at helping the small business owners in the state of California to meet their capital requirements by offering access to low-cost financing in the form of tax-exempt bonds and increased access to loans. This particular program tries to encourage banks and other lenders to offer loans to small business owners who fall outside the conventional underwriting standards. CalCAP provides loans to small businesses to help them grow their business. You, the small business owner can use the loans for a variety of purposes, such as for working capital, capital projects, acquisition of land, purchase of equipment, and construction or renovation of building.

One important feature of CalCAP is that it contains an insurance part in it. In fact, it provides up to 100% protection on certain loan defaults. By participating in government-backed CalCAP program, various lenders are meeting the financing needs of the small business owners of the state of California. However, certain kinds of financing such as gambling, adult entertainment business, bas business etc are not offered through CalCAP.

The upper limit of the loan that can be taken through this program is $5 million. It is up to the discretion of the lenders to decide which loans to enter into CalCAP. The rates associated with these loans are decided by the lenders. Different categories of loans are available such as fixed rate or variable rate loans, short term or long term loans etc.

Small Business Loan Guarantee Program (SBLGP)

The main objectives of this federally sponsored small business loan are to create sustainable employment opportunities and as well as to stimulate capital investment for small business start up. There are three types of loans offered through such program - term loan guarantee for capital costs, working capital loan guarantee for new businesses and working capital loan guarantee for existing businesses. Different types of business units who are eligible for such loan assistance include information technology related industries, manufacturing & processing industries, tourism industries, export-oriented or import replacement industries, various cultural activities and non-profit business etc. Anyways, in order to become eligible for such loan, you should own a full time, round the year business.

These are the two main sources of federal loans for the for business owners in the state of California.