San Jose Business Lawyers Blog
It is never easy to break into the competitive world of technology. Now, in the midst of a once-in-a-lifetime global pandemic, new businesses face more challenges than ever. The good news is that there are still funding programs available to small business owners and startup companies in California.
What is CalCAP?
The California Capital Access Program (CalCAP) is a program designed to offer financial assistance to small business owners in California. CalCAP assists banks and other financial institutions in making loans and funding more available to small businesses. CalCAP is a reserve that acts to underwrite losses that financial institutions sustain on small business loans. This allows them to make more loans available to small business owners. Loans are available for startup capital, expansion funds, and even for working capital to keep your business afloat during production shutdowns and loss of business due to COVID-19.
In order to apply for CalCAP, you must start by finding a financial institution that has been certified to work with the program. The bank then works with CalCAP to underwrite your loan by enrolling the loan in the program for protection in the event of a default on the loan. In order to be eligible for CalCAP protection, your business must be independently owned and operated. It must be “near bankable” (meaning that you have positive cash flow). The majority of your employees (not to exceed 100 employees total) must be located in California, and your main office located in California as well. The maximum loan amount is $2,500,000, and no funds can be used for passive real estate investments. The proceeds of the loan must benefit the economy of California.
What Options Do I Have If I am Not Eligible for CalCAP?
If you are not eligible for CalCAP, there are still financial programs that can help your business. The CARES Act made extensive provision for financial relief to small business owners. Some of this aid has been administered through the Small Business Administration (a federal agency), and other funds have been sent to states to be administered by state agencies. The SBA now has more funds to make disaster relief loans available to more small business owners across the United States. More funding may be made available through Federal or State programs. Here in California, the Small Business Finance Center also provides disaster relief by guaranteeing loans made to small business owners.
Experienced Silicon Valley Startup Lawyers For New Business Funding Plans
The experienced startup lawyers at Structure Law Group have helped many small business owners access funding and develop sound financial plans. Even in these challenging global circumstances, it is possible to create strategic financial plans that can be implemented in uncertain economic circumstances. It is important to work with a skilled corporate lawyer who can help you access short-term relief, then develop effective long-term financial plans that will help your business thrive in the post-COVID economy. Call (408) 441-7500 or contact us through our website to schedule a consultation.