Small business funding in California

California's Commercial Financing Disclosure Law took effect in December 2022 and is enforced by the DFPI. Every covered offer (most non-SBA, non-bank commercial financing under $500k, and increasingly above it) must show you a one-page box before you sign. The four numbers that matter: total funding provided (net of fees), total dollar cost of financing (fees + interest, not %), APR (calculated per DFPI methodology — this often shocks MCA borrowers seeing 60–120%), and estimated monthly cost.

Two offers can quote the same "factor rate" of 1.35 but have very different APRs depending on how fast they debit. A 6-month payoff at 1.35 is ~120% APR; the same 1.35 over 12 months is ~60%. If a broker is dodging the disclosure or handing you a term sheet without the box, that's a red flag in California — walk. Legitimate lenders provide it automatically.

State-backed programs worth knowing. The IBank Small Business Loan Guarantee Program guarantees up to 80% of a participating bank loan (max ~$2.5M guarantee) for businesses that can't quite qualify on their own — expect 8–12% rates and 45–90 day close. CalCAP (California Capital Access Program) uses a loan-loss reserve model to unlock bank capital for borrowers with credit dings, typically for loans under $250k. Both are cheaper than any MCA but require reasonably clean books and 2+ years of history. For very early or credit-impaired operators, CDFIs like Opportunity Fund (now Accion Opportunity Fund), CDC Small Business Finance, and Main Street Launch lend from $2,600–$250k at 8–20% APR — slower and paper-heavy, but a real alternative to a 1.4 factor.

What we actually fund in California most weeks. Restaurants and multi-unit hospitality operators using card-split MCAs or LOCs to smooth week 3–4 payroll; construction subs and GCs bridging progress-billing gaps on public and private jobs; medical and dental practices using AR-based LOCs against insurance receivables; ancillary cannabis (packaging, delivery tech, testing, real estate — not plant-touching) using MCAs and equipment financing because national banks still redline the sector; and Bay Area professional services firms using LOCs to fund headcount ahead of enterprise invoicing cycles. If your bank statements show $25k+ in monthly deposits and you're incorporated in California, there is a lender for you — the game is comparing the SB 1235 boxes side-by-side and picking the lowest true APR, not the biggest headline number.