Small Business Grants in California – Overview
California is not just known for sandy beaches and warm sunny climates. It is also one of the most lucrative states for businesses in the United States.
Numerous small-time entrepreneurs from California have succeeded in expanding their start-ups into immensely popular brands worldwide.
The state of California offers numerous types of tax credits. There are several government and private funding opportunities in California, too.
Are you planning to launch a new business in California and aren’t sure where to get the funding? Then you’ve come to the right place. In this article, we will check some of the best small business grants in California.
How to Get Small Business Grants in California
Government loan programs are financially helpful for people looking to start or expand their businesses. These small business grants are incredibly useful for those who face difficulties in securing loans from banks.
US Department of Agriculture Business and Industry Loan Guarantees
This is one of the top choices for small businesses operating in rural areas of California. This program provides loan guarantees to lenders.
Eligibility criteria to qualify for this loan guarantee include:
- Start-ups and existing businesses
- Public bodies
- Federally-recognized Tribes
- Non-profit and for-profit organizations
Besides these, the applicant should be a US citizen or reside in the US with legal admittance as a permanent resident.
In addition, private businesses should ensure that loan funds would remain in the US. The business being financed should actively create new jobs or save existing jobs in rural parts of the country.
Utilizing funds is also described clearly. If you receive this small business grant in California, you can use the allotted funds to:
- Convert, expand, streamline, modernize or develop business
- Purchase and develop land or industrial infrastructure for commercial purposes
- Buy and install equipment, supplies, machinery, and inventory
- Refinance debt to improve cash flow and create fresh jobs
- Acquire businesses to maintain operations and save or create jobs
You cannot use the allotted funds in the small business grant in California for:
- Paying beneficiary of borrower, individual, or entity who retains the ownership interest
- Agricultural production (with certain exceptions)
- Investing, lending, or insurance companies
- Fraternal organizations
- Churches and any church-administrated organization
- Gambling or racetrack facilities
- Golf course development or infrastructure
- Rental housing
- Owner-occupied housing
- Paying offline of credit
For additional details, you can visit the official website of the US Department of Agriculture.
US Department of Agriculture Rural Business Development Grants in California
The US Department of Agriculture also offers a special Rural Business Development Grant. This is part of its small business grants program in California.
This is an initiative to offer technical training and assistance to small rural business owners. Businesses with less than 50 employees and US$1 million in gross revenue are considered to be “small businesses” by the department.
The eligibility criteria for applicants include:
- Rural cooperatives (if operating as a private non-profit corporation)
- Federally-recognized Tribes
- Higher education institutes
- Not-for-profit corporations
- State agencies
This small business grant in California is aimed at boosting business projects that serve towns or non-urban communities with a population of around 50,000.
The total grant amount is not fixed and doesn’t have a limit for the maximum grant amount. However, the department gives priority to smaller grant requests.
There are no cost-sharing requirements of any kind. Usually, around 10% of the total Rural Business Development Grant funding is allotted for small business grants.
The funds allotted for this grant can be used for the following purposes:
- Technical training and assistance for business owners and employees
- Acquiring and developing land, construction, renovation or conversion of buildings
- Buying and installing equipment, machinery and utilities
- Abatement and pollution control
- Capitalizing revolving funds for working capital and business start-ups
- Distance learning for job training
- Improving the rural transportation system
- Developing community economy
- Developing business plans and feasibility studies
- Entrepreneur and leadership training
- Rural business incubators
- Long-term business planning
Applicants are advised to submit their business grant applications before February 28th, 2022. You can submit applications by email to [email protected]. Or, you can submit a hard copy of the application directly at the California Rural Development office. For additional information, you can also visit the official website.
Small Business Administration’s Small Business Loans – 7(a) loans
The Small Business Administration (SBA) offers the Small Business Loan, also known as 7(a) loan. This is the most basic and popular loan program from the SBA.
Under this, the agency offers business loans to small businesses in California and all across the United States. This program is aimed at assisting non-profit businesses to get the required financing.
The eligibility criteria clearly state that this small business loan is meant only for businesses and not individuals. Hence, the eligibility criteria are more focused on the business rather than the owner.
Applicants should ensure that they meet the agency’s eligibility criteria in terms of:
- Size of the business
- For-profit status
- Lack of internal business or personal resources for financing
- Ability to repay the loan
There are additional eligibility standards for other variants of the 7(a) loan for special-purpose programs.
For a complete list of eligibility criteria for the SBA Small Business Loan, feel free to visit the official website. The maximum loan amount allotted to individual businesses under this program is US$ 2 million.
The maximum term of repayment for this loan is 25 years for real estate and 7 years for working capital.
The interest rate for the loan depends on SBA maximums and is dependent on the Prime Rate. There are additional fees connected to this loan. However, the payment frequency for this small business loan in California varies.
These are the top sources to seek small business grants in California. The federal and state governments run several funding programs aimed at boosting small and medium-sized businesses in the state of California.
Feel free to do an in-depth internet search to find more relevant business funding opportunities in your area.
Interactive US Map for Small Business Grants