From 1 October 2023 to 30 June 2026, 251 SBA lenders approved 19,508 7(a) loans in California worth $10,162,817,100. The median loan was $200,000, above the national $150,300, and the median rate was 10.5%, a quarter point over the national 10.25%. California borrowers also took 3,479 SBA 504 loans at a median of $918,000. Acquisitions were 8.6% of 7(a) loans, below the national 10.4%, at a median of $692,500. SBA suits California deals that need a small down payment, a long term or financing for goodwill; conventional loans suit companies whose assets and cash flow already carry the debt.
| Measure | California | All industries |
|---|---|---|
| SBA 7(a) loans approved | 19,508 | 162,355 |
| Median loan | $200,000 | $150,300 |
| Middle half of loans | $65,000 – $500,000 | $50,000 – $500,000 |
| Loans of $1 million or more | 14.1% | 12.9% |
| Median rate at approval | 10.5% | 10.25% |
| Middle half of rates | 9.49% – 11.5% | 9.3% – 11.25% |
| Acquisitions (change of ownership) | 1,669 (8.6%) | 16,849 (10.4%) |
| Median acquisition loan | $692,500 | $693,000 |
| Lenders that made these loans | 251 | 1,648 |
| SBA 504 loans (real estate, equipment) | 3,479 | 16,714 |
Approvals FY2024 – FY2026 to date (1 Oct 2023 – 30 Jun 2026), cancelled loans excluded. Source: SBA 7(a) and 504 FOIA loan records, as of June 30, 2026.
- 7(a) loans approved
- 19,508 from 251 lenders (1 Oct 2023 – 30 Jun 2026)
- Median loan
- $200,000 (national $150,300)
- Median rate at approval
- 10.5% (national 10.25%)
- Acquisition loans
- 1,669 (8.6%), median $692,500 at 9.5%
- SBA 504 loans
- 3,479, median $918,000
- Start-ups / franchises
- 8.9% / 7.5% of loans
Bigger loans, a higher price
California's 7(a) loans run larger than the country's. The median was $200,000, the middle half ran from $65,000 to $500,000, and one loan in ten was $1,400,000 or more. There were 2,749 loans of $1 million or more, 14.1% of the total. The rate was higher too: the median at approval was 10.5%, with the middle half between 9.49% and 11.5%, and only 14.8% of loans were fixed-rate.
| Measure | California | National | What it means for a borrower |
|---|---|---|---|
| Median 7(a) loan | $200,000 | $150,300 | Projects cost more here: rent, build-outs, wages and purchase prices |
| Median rate at approval | 10.5% | 10.25% | A quarter point over the country, on loans the same cap applies to |
| Acquisition share | 8.6% | 10.4% | Fewer loans buy companies, but those that do are large |
| SBA Express share | 29% | Most loans went through the full 7(a) process |
SBA's caps do not explain the gap on their own. SBA caps the spread by loan size: the base rate plus 6% from $50,001 to $250,000, plus 4.5% from $250,001 to $350,000, and plus 3% above $350,000. California's median loan and the national median both sit in the plus-6% tier, so the difference is lenders' pricing within the same cap, not a different ceiling. What the caps do mean is that a smaller loan can legally price well above a larger one, and a borrower near a tier line should know where it is; see SBA loan rates and the SBA maximum interest rate.
Only 8.9% of California loans went to start-ups and 7.5% to franchises. This is a market of businesses with history, and a lender reading a California file expects tax returns and financial statements that explain themselves, not a projection.
504: how California owners buy their buildings
The number that sets California apart is 3,479 SBA 504 loans at a median of $918,000, roughly one for every six 7(a) approvals. Where commercial property is expensive, the 504 structure is attractive: a bank typically lends 50% of the project, a Certified Development Company 40% on a long fixed rate, and the borrower puts in 10% (15% for a new business or special-purpose property, 20% for both). The CDC's share goes up to $5 million, or $5.5 million for manufacturers and energy projects, and since July 2026 the 504 and 7(a) limits are counted separately, so using one no longer eats into the other.
Two rules decide whether a California building qualifies. The business must occupy at least 51% of an existing building, or 60% of new construction, which rules out many mixed-use and multi-tenant properties. And the project must be the operating company's own premises, not an investment. SBA 7(a) vs SBA 504 and SBA 504 vs a conventional commercial mortgage set out the trade-offs.
Under Proposition 13, a change in ownership of California real estate generally resets its assessed value to the purchase price, and buying control of the company that owns a building can do the same. Lenders underwrite the new tax bill, not the seller's.
That reassessment is easy to miss when a buyer acquires a business together with its long-held building. The seller's property tax may be a fraction of what the buyer will pay, and a coverage calculation built on the seller's expenses overstates what the business can carry. Model it before the letter of intent; buying a business with its real estate covers the structure.
Restaurants, gyms and the trades
By loan count the top five California industries were full-service restaurants (999 loans), limited-service restaurants (677), fitness and recreational sports centers (406), plumbing, heating and air-conditioning contractors (382) and residential remodelers (367). Each raises a California-specific question.
- Restaurants. Labor is the line lenders watch, and since April 2024 many workers at national fast-food chains have been paid under a separate, higher minimum wage. A lender will test coverage on current payroll, not the payroll in last year's returns. See full-service restaurants and limited-service restaurants.
- Fitness centers. Most of the money goes into a leased build-out that has little value to anyone else. Lenders look at membership retention and the length of the lease against the loan. See fitness centers.
- Plumbing, HVAC and remodeling. A California contractor's license is held through a qualifying individual. In an SBA acquisition the seller may not stay as an owner, officer or employee, so if the seller is the qualifier, the buyer or a hired employee has to qualify for the license before the business can keep working. Lenders ask about it early. See plumbing and HVAC contractors and financing an HVAC company acquisition.
Buying a California business with SBA
California lenders approved 1,669 acquisition loans at a median of $692,500 and a median rate of 9.5%, a full point below the state's overall median, consistent with most sitting above the $350,000 line where SBA's cap is the base rate plus 3%. The federal rules apply unchanged: at least 10% of total project costs as equity; a seller note counting for up to half of that only on full standby for the life of the loan (seller notes and SBA's full-standby rule); no earnout; an independent valuation where the amount financed, less appraised real estate and equipment, exceeds $250,000; and a personal guarantee from every owner of 20% or more.
From 1 October 2026, SOP 50 10 8.1 raises the bar for every change of ownership: 1.25x debt service coverage on historical results, financial due diligence on every deal, a quality of earnings report on acquisitions of $3 million or more excluding real estate, and amortization of no more than 10 years except for the real estate share. The seller may consult for up to 24 months after that date, up from 12.
Two state rules belong on every California buyer's closing list. A buyer of a business that holds a seller's permit can become liable for the seller's unpaid sales tax unless it withholds enough of the price until the state issues a tax clearance, and a similar successor liability applies to unpaid payroll taxes. Lenders expect these handled through escrow; see escrow and holdbacks. And because California is a community property state, lenders often ask a guarantor's spouse to sign; see spouse personal guarantees.
SBA or conventional for a California company
With 251 lenders active in SBA and many more lending conventionally, a California company has choices, and the right one depends on what it is financing.
| What you are financing | SBA path | Conventional path | California note |
|---|---|---|---|
| An owner-occupied building | 504, or 7(a) up to 25 years | Commercial mortgage, usually with more equity | Model the Prop 13 reassessment either way |
| A company whose price is mostly goodwill | 7(a), up to 10 years, 10% equity | Cash-flow lender at 2x to 3.5x EBITDA, with more equity | Median acquisition loan here: $692,500 |
| A project above $5 million | 7(a) to its limit alongside another piece | Senior or unitranche lender | Larger deals often combine programs |
| Working capital tied to receivables | SBA CAPLines | Asset-based line at 80% to 90% of eligible receivables | A line grows with sales; a term loan does not |
| Refinancing existing debt | 7(a) if the new payment is at least 10% lower and the debt has been current for 12 months | Bank or private credit | SBA will not refinance an active cash advance |
SBA's advantages are the low equity requirement, long terms and a willingness to finance goodwill. Its costs are the guaranty fee, the eligibility review and personal guarantees. Conventional bank lenders commonly look for debt service coverage of at least 1.25x and more equity, and they are not bound by SBA's rule that every owner of 20% or more guarantees the loan. SBA 7(a) vs a conventional acquisition loan compares them on a purchase.
Preparing a California file
The SBA core is national: two to three years of business and personal tax returns, a P&L, balance sheet and debt schedule with copies of notes being refinanced, and a personal financial statement for each 20%+ owner. California files go faster through credit when they also include:
- For real estate: the current property tax bill and an estimate of the reassessed bill after the purchase
- For contractors: the license record and who qualifies it, before and after closing
- For restaurants and other labor-heavy businesses: current payroll by month, reflecting today's wage rates
- For acquisitions: the target's latest full year of figures, the letter of intent, and the seller's sales and payroll tax standing
- Which guarantors are married, so spousal signatures are planned
Transparent's lender book holds 1,800+ lenders, including 278 that write SBA 7(a) and 504 and 1,148 that write term and private credit, so an SBA request and its conventional alternative can be priced on the same file. Once the documents are in, the full lender package, including financing model, lender presentation, blind teaser and underwriting memo, is built in a day. Nothing is charged before closing, and on SBA loans the lender pays Transparent. See the package.
Common questions
- What is the typical SBA loan size in California?
- The median 7(a) loan approved from October 2023 to June 2026 was $200,000, with the middle half between $65,000 and $500,000. That is above the national median of $150,300. Acquisition loans had a median of $692,500 and 504 loans a median of $918,000.
- Why are California SBA rates higher than the national median?
- The median California rate was 10.5% against 10.25% nationally. Both medians fall in the same size tier, where SBA allows up to the base rate plus 6%, so the gap is lenders' pricing within that cap rather than a different rule. Larger loans, above $350,000, are capped at the base rate plus 3%, and California's acquisition loans had a median of 9.5%.
- Does Proposition 13 affect an SBA loan?
- Yes, when real estate changes hands. A purchase generally resets the assessed value, and buying control of the entity that owns the property can too. Lenders underwrite the higher tax bill, which reduces the debt a deal can support.
- Can I buy a contracting business in California if the seller holds the license?
- Yes, but the license has to be qualified by someone who stays with the business. Under SBA's change-of-ownership rules the seller cannot remain as an employee, so the buyer or a hired qualifier must be in place. Lenders ask for the plan before they commit.
- Should I use SBA 504 or 7(a) to buy my building in California?
- 504 usually gives a long fixed rate on the CDC's share and a 10% down payment, but only for owner-occupied property that meets the 51% test. 7(a) can combine the building with goodwill, equipment and working capital in one loan. The right answer depends on what else is being financed.