California Southern Small Business Development Corporation is a public benefit corporation, 501(c)3, which is chartered and regulated by the California Infrastructure and Economic Development Bank (IBank) to provide loan guarantees to financial institutions. California Southern’s primary mission is to foster greater levels of job creation and retention throughout the small business community. California Southern was founded in 1989 and annually enters into a contract with Governor’s Office of Business and Economic Development and the California Infrastructure and Economic Development Bank to administer loan guarantees to financial institutions in San Diego and Imperial Counties. California Southern is a member-agency of The Association of Financial Development Corporations (“TAFDC”). Including California Southern, there are currently 8 non-profit Financial Development Corporations (FDCs) operating in rural and urban areas throughout the State which are member-agencies of TAFDC. The 8 member-agencies each operate independently using different names and provide loan guarantees to financial institutions in their respective markets.
Supporting both San Diego and Imperial Counties, the offices of California Southern are located at 2825 Dewey Road Bldg. 202, Suite 205, San Diego, CA 92106.
The State of California Small Business Loan Guarantee Program (SBLGP) provides up to an 80% loan guarantee to a participating commercial lending institution, Certified Community Development Financial Institutions (CDFIs), and/or a credit union to help small businesses having trouble accessing credit. The loan guarantee has a maximum of $1,000,000 for up to seven years. The program is designed to help small businesses expand, grow, create and retain jobs in California.
The Financial Development Corporations were created to act as an agent and intermediary between the state of California and the small business borrowers to provide access to capital. Most FDC’s are incorporated as a nonprofit, public benefit, small business development corporations under section 14000 of the California Corporations Code.
The FDC’s have specific geographical areas that serve all of California. California Southern focuses on San Diego and Imperial Counties. However, a small business borrower is not tied to a specific FDC. Each FDC can offer loan guarantees to any commercial lender, CDFI, or credit union in the state, regardless of geographical location.
Primarily, real estate loans are based on cash flow and the applicant’s ability to repay the loan. The actual lending policies for this program are conditioned upon the individual lender.
No, relative to the required paperwork, it is not any different than obtaining a loan from any other institutions. Typically, the small business borrower has the relationship with the participating lender; the participating lender has the relationship with the FDC. Each FDC will request copies of the information prepared for the bank’s credit approval, which can be transmitted electronically. Generally, both the lender and the FDC have the same standard credit requirements.
The actual interest rates are set by the individual lender. The FDC’s do not set the interest rates.
Generally, this would be subject to the individual lender. The FDC’s have a contractual commitment to the state of California to be a good steward of the state’s trust funds. Therefore, it is incumbent that the small business borrower has some participation or “skin in the game” in order to successfully obtain a loan and a loan guarantee.
The lender will hold all collateral for the loan from the borrower. The FDC is not the lender but has a loan guarantee with the lender, which promises to pay up to 80% of any loss that might be sustained by the bank in the event of a default.
The Small Business Administration (“SBA”) offers a variety of loan programs including a loan guarantee component similar to the SBLGP. However, it is administered by the Federal government. The SBLGP has similar feature to the SBA loan guarantees but in many cases, there is expedited loan processing times with the SBLGP. In addition, the major difference for the lenders is that the SBA loan guarantees can be sold on the secondary market; there is no secondary re-sale market for SBLGP at this time.
As a small business borrower, you have the option to look for a lender that will participate in the SBLGP. The FDC’s can work with any commercial lender, CDFI or credit union participating in the program. You can contact the individual FDC’s in your area to see what local banks are participating in the program.
A small business is eligible if you are doing business in California and have less than 750 employees in California.
California Southern is not a bank, but rather a lender “partner” committed to helping potential, new and existing business owners in San Diego and Imperial Counties secure the funding required to grow their business.
California Southern has worked with hundreds of start-up businesses in San Diego and Imperial Counties. Typically, our start-up loans require that you have a secondary source of income (other than the business for which you are applying) to support the loan.
Yes, the fee is 2.5% of the guarantee amount plus a $250 Documentation Fee. For example, on a $100,000 loan from your lender that receives an 80% guarantee, the portion guaranteed is $80,000. 2.5% x $80,000 equals $2,000, plus the $250 documentation fee totals $2,250 in fees for the guarantee. Please note that your lender may have additional fees.


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