California secures $366M in loan guarantees to support small businesses

California's Assembly Committee on Economic Development highlighted a pressing issue for small businesses during a recent meeting, revealing that the state received approximately $366 million in loan guarantee requests last fiscal year. Notably, $130,000 of this funding originated from San Diego, underscoring the region's commitment to supporting local enterprises.

The discussion emphasized the critical role small businesses play in California's economy, often described as the "true lifeline" of the state. However, securing loans for amounts under $100,000 remains a significant challenge. The committee noted that these smaller loans are particularly difficult to obtain, prompting a focused effort to partner with Community Development Financial Institutions (CDFIs), mission lenders, and local banks to improve access to affordable capital.

Concerns were raised about the high-interest rates charged by some lenders, with reports of rates soaring to 40-60%. A new cash advance program was also discussed, which, when calculated, could lead to an astonishing 110% annual percentage rate (APR). This alarming figure highlights the urgent need for more accessible and affordable financing options for small businesses in California.

The committee's discussions signal a commitment to addressing these challenges, aiming to enhance support for small businesses and ensure they can thrive in a competitive economic landscape.