-more-->It’s a difficult time for small and emerging businesses given the overall state of the economy.
At the same time though, it’s expected, if not inevitable, that we’ll see a spike in new businesses as we emerge further from the recession. Businesses that are designed strategically, and which maximize opportunities, may be poised to find success in the aftermath of 2020.

One way to seek out advantages with a lending business specifically is to consider where the business is actually located. Favorable conditions in any given city or state can help to lay the foundation for both short- and long-term success. And as we take this idea into consideration, a strong argument can be made that California may be the best place for a new lending company.

One reason for this is that the state is increasingly gaining a reputation for strong lending. When we looked at American cities’ leading in loans, in fact, California had three of the top 10 metro areas, and six of the top 25.
These rankings are primarily made with respect to loans for entrepreneurs, as opposed to mortgage lending specifically. But the reputation of the state in this regard can be beneficial nonetheless. California is a place in which people expect to be able to acquire loans, for personal and business-related purposes alike, and that provides openings for new lending businesses.

Another interesting factor is the ease of starting a lending business in this particular state. Presumably you’ll want to make such a business official, which more often than not means arranging a Limited Liability Company registered with state government offices. And starting a new LLC in California involves little more than filling out some relevant information online. Naturally setting up the business itself takes a lot more than that, and will occupy the bulk of your time. But registering a new business in California is an easy, headache-free matter that adds further appeal to the state for new lenders.

California also has an interesting tax situation to consider. We’ve noted generally that commercial property is struggling during the pandemic, and commercial real estate holders in California may soon have another challenge to deal with.
A proposed bill that’s on the ballot this November would increase Californian commercial real estate taxes — essentially by rolling back a past bill (Prop 13) that limited property tax increases. Clearly, the passing of this new bill (Prop 15) would be bad news for CRE owners.
For lenders though, it might actually lead to more opportunity. People in California aren’t going to stop owning commercial real estate, but with increasing financial demands they may need to focus more on securing loans.

Throw in, on top of all of these points, that California is, in general, a massive economy filled with innovation and entrepreneurial energy, and it’s hard to imagine a better environment. It’s likely that this state will be among the quickest to rebound as we slowly get past the pandemic, and the business activity that will come with this, coupled with the favorable conditions outlined above, make for a good environment for a new lending company.

Stephen Berry is a freelance writer based in San Jose, Calif. His writing covers business, finance, technology and startup culture.