Small Business Loans for San Francisco

San Francisco, California is world-renowned as a cultural, economic, education, and technology hub. It is, arguably, second only to Los Angeles among California cities for its prominence and familiarity. 

As one of the largest cities in northern California, it acts as the yin to LA’s southern California yang. The metro area as a whole boasts a population of some 4.7 million people, though fewer of a million live within the city limits proper. 

A highly diverse and inclusive city, San Francisco is well known for its association with hippie culture in the 20th century, and has become an important bastion of acceptance for the LGBTQ community in the 21st century.

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In what can only be described as some form of cosmic irony, the same area that birthed the hippie and environmentalist movements has become associated, in modern times, with being the birthplace of many tech and Internet behemoths. 

Along with being Silicon Valley-adjacent, and forming the northern part of said valley (with San Jose at the southern end), many well-known international brands call the greater San Francisco area home.

These include Airbnb, Craigslist, Dolby, Dropbox, Fitbit, Gap, Levi Strauss, Lyft, Mozilla, Pinterest, Reddit, Salesforce, Square, Twitter, Uber, Weather Underground, Wikipedia, Yelp, and many more.

It also balances this economic engine with a great emphasis on culture, the arts, and sciences, making it a fantastic place to find talented multi-disciplinary employees for your small business.

San Francisco

As anyone who has ever worked, lived, or visited San Francisco knows, however, it can be extremely expensive. Median income is among the highest in the country, but with that comes high prices, especially for housing.

Indeed, San Francisco today is considered one of the most expensive places to live or work. Those same price considerations come into play when attempting to run a small business. 

Leases and rent on property, salaries and benefits for employees, and related expenses all run fairly high compared to many other locales in the US. This can make it all the more important to ensure that you have a reliable source of small business funding to manage your cash flow and bills.

Manage Cash Flow

Small business loans for San Francisco companies are especially useful in this regard. They are among the most common types of small business financing that businesses rely on to fund their operations, growth initiatives, and purchases. 

However, they are far from the only kind of small business funding available for Bay-area businesses.

Depending on the needs, time scale, and qualifications of a given small business, the options available for funding can include small business loans, short-term business loans, business lines of credit, merchant cash advances, and other products. 

Small business loans in San Francisco are really just the start of modern small business financing that can be invaluable for keeping your small business afloat.

Funding Small Business

Despite the wealth of small business funding opportunities and products that are available today, many small business owners are not, in fact, financing experts. Newer small businesses especially may have owners or senior staff who are not well-versed in the different types of funding options available.

They may be uncertain of the different pros and cons associated with these various types of small business funding, and not sure how to best put them to use to finance the business.

This is as true with more exotic funding options as it is with simple small business loans for San Francisco companies, and companies throughout the US. To address that knowledge gap, we’ve put together this guide to business loans in San Francisco.

Below, we’ll dive into several topics related to small business funding and small business loans in California, including the details on the different funding options that are available, how they compare to one another, and the two main sources of small business funding – banks and private lenders. 

We’ll also highlight some of the benefits of choosing a particular private lender, BizFly Funding, as your go-to source for funding, including small business loans in San Francisco and beyond.

Small Business Funding Options

To begin, it’s critical to understand the different types of small business funding products that are available. 

This will define the contours of how these small business financing products work, how they differ, and allow for a clearer understanding of the inherent benefits and drawbacks associated with each one.

Small Business Funding Options

From the start, it’s important to note that one of the core principles of small business financing is to try to map the type of funding (and specifically the term or duration of that funding) to the type of expense for which you intend to use the proceeds. 

This allows you to minimize the debt service costs, and maximize your odds of repayment of the financial instrument.

It’s especially important when you’re looking at business funding in San Francisco and other high-rent, high-expense areas, since every little bit of money you can save on interest and debt costs matters that much more. 

There are a range of different small business funding options available from most modern lenders, though that availability can vary wildly (as we’ll discuss later when talking about sourcing your small business funding).

different business lenders

The basic small business loans for San Francisco businesses are fairly straightforward, and work as most loans do. 

After approval, you receive a lump sum of cash at the time you take out the loan, which then must be repaid, with interest, over the term or duration of the loan. The repayments are usually in equal amounts, spread out monthly most often, for a few years’ time. 

These loans may or may not require collateral (secured loans require collateral, unsecured loans do not), and will have different interest rates, durations, and other characteristics that vary from lender to lender.

Some of the other types of small business funding in California and across the US may have somewhat different mechanisms, repayment schedules, and related characteristics, or even differ wildly in their nature and design.

Low qualification requirements

This is separate and apart from the very real variability you will find between lenders in terms of qualification requirements, maximum loan amounts available, application and approval time, how soon you may be funded, and so on. 

The core differences between the types of small business funding that modern lenders offer in their portfolio are outlined below – but know that these details, too, can vary a bit from lender to lender.

  • Small business loans
  • Provide a lump sum of cash proceeds up front
  • Repaid in equal installments, consisting of principal and interest on the loan, over the loan term, and at the interest rates set by the lender and agreed to in the loan agreement
  • Loan term is usually a few years to a decade on the high end
  • Repayment frequency is most often monthly
  • Small business lines of credit
  • Does not provide any cash up front – just approval for a maximum credit limit
  • Small business lines of credit work similarly to a credit card, allowing borrowing repeatedly in any amount needed, so long as the outstanding balance is below the credit maximum
  • There is no need to constantly re-apply for a small business loan, and you have control over the amounts borrowed and repaid from your credit line
  • Interest charges on the outstanding balance only
  • Repayment may operate with minimums, as with a credit card
  • Repayment is typically on a monthly schedule, and less commonly weekly or daily
  • Short-term business loans
  • Very similar to an ordinary small business loan, but with a shorter term and faster repayment
  • Loan term is usually a few months to a year or two
  • Interest rates may be reported as higher on an APR basis than for longer-term loans, as the loans are often meant to be paid off in less than a full year
  • Repayment is much faster, typically with weekly or daily payments required
  • Merchant cash advances
  • Different than many other kinds of small business funding
  • Like a small business loan, they provide a lump sum of cash up front
  • Rather than a loan, it’s actually a pre-sale of your future debit or credit card sales at a discount
  • The discount accounts for the interest charged, known as a factor rate
  • The duration or term is open-ended, and not based on the calendar
  • Repayment is based on sales, so slower sales mean a longer time to repay the cash advance, and vice versa
  • Repayment is automatic via credit/debit card processing once an MCA loan is set up for your business
  • Often, merchant cash advances are one of the easiest kinds of small business funding to obtain, with good approval odds even if your business has a poor credit score, limited revenue, and only a short time in business
  • Because of the way in which a merchant cash advance is repaid, however, they are not viable if your business doesn’t do a majority of its sales through credit and debit cards
  • Small business loans for women-owned businesses
  • Comparable to the small business loans discussed above
  • Provide increased access and reduced eligibility requirements in order to ensure fairer, more level playing field for this historically marginalized demographic
  • Bad credit business loans
  • Small business loans for businesses with bad credit or a limited credit history
  • Work in the same way as ordinary small business loans
  • Usually, they have relaxed credit score and other eligibility requirements
  • Allow even businesses with bad credit or a limited credit history to access credit and loans, essential for building/rebuilding a positive credit score

Two Different Sources for Business Loans in California

With that basic understand of the different types of funding and business loans in California, you can then start to focus on the different sources for these loans and credit products. 

Don’t worry, it’s far less complicated than it sounds! In point of fact, there are really only two categories of sources for small business funding in the US today: banks and private, non-bank lenders. Sounds simple, right?

Two Different Sources for Business Loans in California

There’s actually a bit more to it than that, as your decision here will govern many of the details around availability of certain kinds of small business funding, what kind of funding you can qualify for (and how likely you are to be approved), the speed or time involved in the approval and funding process, and much more. 

This deceptively simple decision can make a huge impact on the success or failure of your small business funding journey, which often translates into success or failure of your small business, so it matters a lot. 

To skip ahead and spoil the ending of this story, most small business owners who have borrowed or attempted to borrow from both of these sources state that private lenders are their preference. 

There are many reasons for this sentiment, which roughly can be summarized as hinging on risk, access, time, and service, which we’ll explore through a comparison below.

Perhaps it’s easiest to illustrate the differences between banks and private lenders, and their role in providing funding like small business loans in San Francisco, by taking each source one at a time.

Banks

Let’s start with banks and related traditional financial institutions. Naturally, most small business owners have bank accounts, possibly with multiple banks, and see them as a familiar, logical place to turn for small business funding.

On the surface, this belief makes sense. Once you dig deeper, however, it becomes clear that things are not that simple. Put simply, banks don’t like risk, at least not when it comes to lending and commercial banking.

Banks

There have been requirements for certain risk management and capital coverage covenants for some time, and these only got stricter after the meltdown of the late 2000s. In a nutshell, it means that many banks are hesitant to loan out funds to risky market sectors or clients. 

Unfortunately, given the oft-cited statistic that half of all small businesses fail within the first 5 years, it’s not much of a leap to see their point of view – that small business funding is a risky business. 

As a result, they often impose many measures – including strict qualification requirements – that make it much, much harder to qualify for small business funding. 

They may only have limited options for credit lines or small business loans as a result, rather than a full portfolio of choices. On top of that, as we mentioned earlier, there’s another factor that makes banks a poor choice for small business loans in San Francisco, and that’s collateral.

secured funding products

As part of those same risk mitigation and management efforts, most banks that offer small business financing will only offer secured funding products – loans and credit lines that are backed by collateral from the borrower. 

This helps ensure that, even if a small business fails or goes bankrupt, they will still be made whole for the outstanding balance on the account. While they offer lower interest rates than unsecured loans and credit products, that is about the only benefit for small business owners. 

In reality, collateral-backed loans are an enormous risk for borrowers, especially in the world of small business. Yet another problem with bank loans for small business financing stems from the way in which collateral is valued. 

Principles of fair market value mean that businesses may be required to put up assets worth several times the value of the loan or credit product in question in order to qualify. Does pledging $500,000 worth of property or equipment sound like a good idea for a $100,000 loan? 

That’s not a smart move in most small business owners’ minds, as it presents a massive asset risk with little upside. 

Collateral valuation also adds considerable time to the application and approval process, meaning secured loans and credit products can take weeks to even months to close, whereas unsecured small business loans in California are often closed and funded in a matter of days.

Private Lenders

On the other end of the spectrum are private, non-bank lenders. Almost every disadvantage or problem noted above regarding banks is, in fact, an advantage or positive when it comes to private lenders. 

The vast, vast majority of private lenders only offer unsecured small business loans and credit products, with no collateral requirements. This immediately reduces the risk to small business owners.

Private Lenders

The only tradeoff here is a somewhat higher interest rate than on a secured small business loan in San Francisco (or other secured funding product), which amounts to very little additional cost, especially compared to the enormous reduction in risk.

Simultaneously, the lack of collateral requirements with private lenders means that the entire lending process can happen much more quickly. 

Many private lenders can offer small business owners approval decisions and loan agreements to sign in hours to days, rather than weeks or months. 

Some of the top private lenders can even provide most customers with their small business loan proceeds in as little as 1 business day following loan approval. As anyone who has ever run a business knows, time is often directly linked to money.

Business Getting funded faster

Getting funded faster means you are more able to respond to changes in market conditions, production, customer demand, seize new opportunities when presented, and so on. 

All of that translates into a greater fluidity in managing your business, and better odds for long-term success.

But the benefits to seeking unsecured small business funding in San Francisco from private lenders don’t end there. There are many others to consider, including:

  • It’s usually far easier to obtain small business loans and other funding products from private lenders.

Because they don’t take depositor accounts as with a commercial bank, they don’t need to manage risk in the same way or maintain certain capital covenants. Banks have fairly stringent requirements, as we touched on above, and private lenders have no such restrictions. 

That means most private lenders serve a wider swath of the small business population, and can set their own risk tolerances.

  • Consistent with that greater tolerance for risk, private lenders usually maintain less-strict qualification requirements for their credit products and loans.

Business loans with bad credit are an oxymoron when it comes to banks, yet are readily available from many private lenders. 

Lower credit score requirements, less time in business, and lower monthly revenue minimums are characteristic of private lenders, and greatly increase access to vital capital for small business owners, including those with bad credit or a limited credit history. 

  • The reduced risk from utilizing an unsecured small business loan from a private lender (as compared to a secured loan from a bank) is undoubtedly the greatest benefit for small business owners.

In this context, choosing a private lender is almost always required in order to obtain an unsecured small business funding product, since banks rarely if ever offer them. 

So it’s not so much an advantage of private lenders as essential for businesses who want to manage their own risk of an uncertain future.

  • Most private lenders, owing to competition in the market, have a much greater focus on providing customer service and a positive lending experience for their customers than do banks.

Faster and online application processes, faster approvals, greater service and support, fast funding, and market sector expertise are all elements you’ll find at a private lender, which may be lacking at a bank. 

These traits can really help small business owners in need of small business financing to choose the right kind of funding, and best deploy it for their business needs.

By now, it should be fairly obvious why our original premise holds true: that most small business owners prefer seeking unsecured small business funding in California from private lenders over banks and traditional financial institutions. It’s faster, easier, with less risk, and better approval odds – simple!

The Best Choice for Small Business Loans in San Francisco – BizFly Funding

If you’ve made it this far, you’re now aware of the benefits of private lenders for small business loans in San Francisco. You’re also briefed on the different kinds of small business funding that are available, and how they compare to one another. 

Now, there’s just one step left on your journey to obtaining small business financing – choosing a lender and starting the application process!

The Best Choice for Small Business Loans in San Francisco – BizFly Funding

We highly suggest you consider BizFly Funding as your source for small business loans in California or throughout the US. BizFly Funding is one of the leading private, non-bank lenders exclusively serving the small business community today. 

They have a full range of small business funding products, including all of the options discussed in the first section of our guide. Loan amounts of up to $1 million are available for qualified small businesses on several of the funding products from BizFly Funding. 

That’s the kind of capital that can make a real difference in the trajectory of your business’ financials. Like most private lenders, BizFly Funding offers unsecured loans and credit products. 

They also have a fast, online application process, quick approvals, high approval odds, fast funding, outstanding customer service – the list goes on. That’s why businesses from over 130 different business sectors have chosen BizFly Funding for their small business funding needs. 

While it is true that every applicant is different, and must be evaluated on a case-by-case basis, the general qualification requirements for some of the top small business funding products (including small business loans for San Francisco companies) are highlighted below.

  • Loan term of 2 to 36 months
  • Minimum 6 months in business
  • Credit score of at least 500
  • $10,000 minimum monthly revenue
  • Loan amounts of $5,000 to $1 million
  • Interest rates of 9 to 45%
  • Loan term of 6 to 24 months
  • Minimum 12 months in business
  • Credit score of at least 600
  • $10,000 minimum monthly revenue
  • Loan amounts of $15,000 to $1 million
  • Interest rates of 9 to 45%
  • Loan term is variable (repayment is based on sales and not tied to the calendar)
  • Minimum 2 months in business
  • Credit score of at least 500
  • $8,000 minimum monthly revenue
  • Loan amounts of $8,000 to $250,000
  • Factor rates of 24 to 49%
  • Credit line term is variable
  • Minimum 6 months in business
  • Credit score of at least 650
  • $10,000 minimum monthly revenue
  • Credit line amounts of $5,000 to $250,000
  • Interest rates of 5 to 10%

Whether you’re a small business owner in San Francisco, elsewhere in California, or anywhere across the United States, it is well worth your time to review the products and services available at BizFly Funding. Filling out the online application and contact request is free, and there’s no obligation. 

You could find yourself well on your way to up to $1 million in small business funding, with all the inherent advantages of sourcing from a private lender. In almost no time, you can have that cash in hand from your business loan in San Francisco, ready to go to work for your business. 

It can help you with capitalizing on market trends, scoring new sales opportunities, and gaining the kind of competitive advantage you need to survive, grow, and thrive!

Visit BizFly Funding online at https://bizflyfunding.com to apply or learn more.

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