The capital city of the great state of Texas is Austin, and it’s one of the fastest-growing cities in the entire United States. Austin has over 975,000 residents, lovingly referred to as Austinites, including a diverse mix of government employees, college students, musicians, high-tech professionals, and blue-collar workers. The city’s official slogan promotes Austin as “The Live Music Capital of the World,” in reference to the city’s many talented musicians and impressive live music venues.
Since the 1990s, Austin is emerging as a center for tech and business, with a strong economic background in government, high-technology, and education. Austin is home to a number of Fortune 500 companies’ headquarters and regional offices. The University of Texas at Austin, attended by over 50,000 students, is also located in the bustling city. Austin accumulates thousands of graduates from the University’s engineering and computer science programs each year, providing a steady source of employees that help fuel the area’s technology and defense industries.
From an economic perspective, it may seem that Austin, TX, has a lot going for it. However, the small businesses in the greater metropolitan area still face an array of challenges getting small business loans. Traditional lending outlets often include banks or credit unions, but these typically have stringent guidelines, strict requirements, and mountains of paperwork for their limited loan options for small businesses. That’s where AdvancePoint can come in to help Austin small business owners find the appropriate alternative lending option for their enterprise.
How To Get Small Business Loans in Austin, Texas?
AdvancePoint is an excellent resource for Austin business owners in search of funding. We offer an extensive marketplace of alternative loan options to help small businesses in Austin fulfill their business needs.
The 9 Best Small Business Financing Options for Austin, Texas
1. Long Term Business Loans
Lenders define long term small business loans as loans with a duration exceeding two years. Businesses in Austin are offered a fixed amount upfront and then charged principal and interest. Unlike a business line of credit, you cannot draw money as you go with long term loans. Typically, long term loans are a great resource for businesses in Austin because you can use the extra capital for expansion and help finance larger projects.
Interest Rates: Interest rates starting at 5.50% or treasury index plus 1% to 2.5%
Terms: 2 to 10 years
Fees: Origination fees range from 0% to 3% (depends on risk and lender)
Loan Payments: Monthly or bi-weekly
2. Business Line of Credit
Business lines of credit are an open revolving line of funding that allows Austin businesses to draw funds on-demand as needed or make essential purchases. This type of funding charges a principal and interest rate to small business owners in Austin. Business lines of credit have a limit that cannot be exceeded without a lender’s approval and require renewal by lenders either semi-annually or annually to be extended. The primary reasons entrepreneurs in Austin choose a business line of credit instead of loans are working capital business needs, affordable rates, and flexible terms.
Interest Rates: Starting at 5.50% or treasury index plus 1% to 2.5%
Terms: Open revolving line
Fees: Origination fees ranging from 0% to 3%
Payment Monthly, bi-weekly, or weekly
Credit Score Standards: Good to excellent preferred. All types are considered.
3. Short Term Small Business Loans
Small businesses in Austin can obtain short term business loans, which are defined as loans typically repaid within 6 to 18 months of issue. These loans offer a lump sum upfront with a fixed payback amount. The payback amount is calculated using a factor over a short term of time. The rates are not principal and interest, but instead a “factor rate” that costs more than traditional loans.
Most Austin businesses choose a short term business loan when they do not qualify for a traditional small business loan. Short term loans charge more for costs, and the repayment duration is much shorter. Payments are made more frequently to compensate for the higher risks lenders take in offering this product. These loans are a popular resource for many small businesses in Austin because of the reduced documentation requirements (no financial statements required) and much more relaxed tolerances than traditional loans in Austin. This product is a fantastic solution for working capital business needs.
Rates: Factor rates range from 1.09% up to 1.45%
Term: 6 to 18 months in duration (typically 12 months or less)
Fees: 0% to 5% origination fees
Payments: Weekly, bi-weekly, and, in some cases, daily Monday-Friday
4. Business Cash Advance
Business cash advances (BCA) are also known as purchase of future sale agreements, which advances future sales at a discount to Austin businesses. The business is responsible for paying back a fixed payback known as a specified amount, which is higher than the amount that was advanced to the company. The difference between the advance amount and the payback amount is called the “factor rate or cost,” which is a fixed cost. These are not principal & interest costs.
Austin businesses repay the advance by taking a fixed percentage of future overall deposits called the specified percentage. The payments are collected by an ACH fixed daily or weekly payment deducted from a bank account based on the specified percentage of future sales. At the end of every month, reconciliation can occur. If the fixed payments taken out of the bank account monthly are more than the set future percentage of monthly sales, Austin small business owners can request a refund back to the business for overpayment so that the set specified percentage of sales collected for the business matches the revenue volumes. Repayment continues until the payback amount is paid back in full. There is no time limit with advances as the fixed payback percentage ever changes due to fluctuating revenue. This product is an excellent solution for working capital business needs.
Rates: Ranges from 1.09% up to 1.45%
Terms: No time limits. Payments continue until paid in full based on specified percentage collection method and are dependent on future revenues.
Fees: Origination fees that range 0% to 5%
Payment: Weekly or daily Monday-Friday Fixed ACH
5. Merchant Cash Advance
A merchant cash advance, also known as a purchase of future sales agreement, operates very similarly to BCAs. The most significant difference is the repayment process, which is connected to future credit card revenue instead of overall sales. MCAs take a set percentage of future card sales at the time of batch until the advance is paid back in full by an Austin business.
Austin business owners find this type of funding valuable when they have fluctuating revenue. Business owners don’t want to lock themselves into a fixed payment that could negatively impact cash flow or profit margins if revenues decline or fluctuate. This product does not require financial statements like tax returns. As a reminder, a merchant cash advance is not a loan, but an advance, by selling a portion of the business’s future sales at a discount to a funder in exchange for cash now. This product is a fantastic solution for business owners in Austin that have working capital business needs.
Rates: Range from 1.09% up to 1.45%
Terms: No time limits
Fees: Origination fees range from 0% to 3%
Payment: Set fixed percentage of future credit card revenues
6. Equipment Loans
Austin area businesses that use equipment during daily operations often turn to equipment financing to purchase machinery. This fantastic funding option secures the equipment itself as collateral in the event a business owner defaults. The good news for Austin businesses is that equipment financing requires limited paperwork. All you need is a one-page application and a few bank statements to get started. Equipment loans are easy to apply for and fast to obtain. Sometimes, business owners can be approved on the spot, although additional time is typically required.
Rate: Range from 1.09% up to 1.45%
Terms: 2 to 7 years
Fees: Origination fees range from 0% to 3%
Payments: Weekly or daily (Monday-Friday) fixed ACH
7. Small Business Administration (SBA) Loans for Businesses in Austin, Texas
The Small Business Administration (SBA) is a federal government agency that provides loan programs, loan guidelines, and loan guarantees to approved SBA lenders, who then issue small business loans to businesses in Austin. The Small Business Administration’s (SBA) mission is to help American enterprises to start, build, finance, and grow their businesses successfully through a loan program.
The SBA is not a lender itself, but instead provides a guarantee that gives approved lenders the ability to take on more risks which they might not ordinarily accept on their own. The SBA has rights reserved for any required recourse. (SBA) loans are highly sought after by small businesses in Austin. There are many government-approved lenders to choose from that offer the SBA loan program. Business owners should expect an SBA loan program to require a business plan to get financing. The SBA loan program application processes are lengthy, but with the help of an experienced SBA-approved lender to help your business through each step, the application package can be a smooth and efficient experience.
Interest Rates: Starting at 5.50%, treasury index plus 1% to 2.5%
Terms: 3 to 25 years
Fees: Origination fees 0% to 3%
Payment: Fixed monthly
Small Business Administration (SBA) Government Lending Programs for Small Businesses in Austin, Texas
SBA Standard 7 (a) Loan Program- SBA loan 7(a) is the SBA’s primary program is designed to provide financial assistance to small business with a good track record. Like the guaranty percentage and amount, the terms and conditions may vary by the type of loans to small businesses. Real estate may be used for collateral but is not required. Working capital needs are the #1 reason to borrow using this loan.
SBA Loan Program 504- The SBA 504 Loan is a powerful economic development loan program that will provide small businesses in Austin with another avenue for financing while promoting business economic development and job creation. The use of proceeds from SBA 504 Loans must be used for fixed assets such as construction, owner-occupied commercial real estate, mixed-use real estate and or land improvements (and certain soft costs), or can also be used to refinance existing debt. This product is great for business acquisition. Equal Housing Lender
SBA Disaster Loans- Economic Injury Disaster Loans (EIDL)- This type of SBA loan not only provides assistance to Austin, TX business owners after natural disasters like tornadoes, wildfires, or floods but when President Trump declared COVID -19 a nationwide health emergency based on the recommendation of the CDC on March 13th, congress provided small businesses access to this program for emergency financing.
SBA Paycheck Protection Program (PPP) Loan- The SBA has established the SBA Paycheck Protection Program loan. This special SBA loan provides loans to small businesses in the Austin, TX area affected by the COVID-19 crisis and needs financial help. Under the right conditions, this program offers forgiveness.
U.S. Small Business Administration
How to Start and Grow Your Business
View the Small Business Resource Guide for information and assistance in growing your local business, exploring funding options, and contracting.
8. Invoice Financing
Invoice financing advances the outstanding balance to an Austin business owner to increase cash flow speed to the business. This solution provides cash quickly, so there is no need to wait for outstanding invoices to be collected and received by the client with invoice financing in place. Invoice financing has affordable costs ranging from 1% to 2.5% in fees based on the face value of the invoice advanced. Invoice financing improves cash flow to Austin area businesses and helps level out working capital.
Terms: Not a traditional loan
Fees: 1% to 3% fee based on the invoice. Monthly Service fees may apply depending on the volume of invoices factored
9. Purchase Order Financing
Purchase order financing offers businesses the ability to raise money to pay suppliers upfront for verified purchase orders. Purchase order loans will finance an entire order or a portion of it, depending on the purchase order funder. When the supplier is ready to ship the order, the purchase order financing company collects payment directly from the customer. The purchase order funder will subtract their fees and then sends the balance of the invoice. This is not a loan but an advance of a purchase order.
Term: Not a traditional loan
Fees: 1% to 3% fee for each purchase order. Monthly service fees depending on volume may also apply
The fast, convenient, and straightforward way to find the financing you need for your Austin small business – now! Get Your Business a Quote Today by filling out our simple form.
Why Do Austin Small Business Owners Need Financing?
The list of the most common small business needs:
- Access to Working Capital
- Equipment/Machinery Purchase and Equipment/Machinery Repair
- Business Plan Expansion (capital for growth and additional work)
- Building Construction and/or Renovation/con
- Help for Cash Flow shortages
- Website Development, Construction, and Maintenance
- Provide Emergency Financial Resources
- Advertising / Marketing needs
- Recruitment of Employees and Training Resources
Frequently Asked Questions
Is it difficult to obtain a business loan in Austin, Texas? Is it hard to find a loan?
It is not difficult to obtain a small business loan in Austin’s metropolitan area. There are many business lenders and approved funding options available that service the Austin, Texas area. However, you must choose your lender and business loan wisely.
Can I apply for business loans using an online small business funding website? Is it trustworthy?
The internet can be an invaluable resource when searching for a lender. In 2020, most people now search on the internet for business lending websites to glean additional information, find reviews on a lender, and in many cases, inquire about getting more information and apply for a quote on a business lender website. This allows an owner to shop, compare, and potentially save significantly.
Are websites trustworthy? Well, about as trustworthy as visiting any business. You are not evaluating the website as much as you are the company and people you speak and communicate with. The website is merely the port of entry, just as if you were walking into a store on main street, except without ever having to leave the comfort of home. Both in-person in Austin or on a website, it’s the same. The business you deal with must earn your trust by how you are treated and the products and terms you are offered.
Can Austin applicants qualify for small business loans with bad credit?
There are many lending options available for business owners with bad credit. Financing options will vary depending on the risks associated with this type of funding and will impact terms, pricing, and costs.
Can I get start-up small business loans in Austin, TX? Is it hard starting a small business in Austin?
Getting start-up small business loans can be extremely difficult and challenging. SBA small business loans are the most traditional option, but they are challenging to get approved for. A business owner’s search will need to include non-traditional means to raise money like private sources or investors.
Initiatives, Loan Programs, and Grants in Austin, Texas, for Small Businesses. Additional Resources, Tools, Support, Help, and Information.
Ausin Economic Development & Business Community Services
LiftFund for Austin, Texas: Special public and private partnerships to assist small businesses across Austin, Tx. Please note that there is limited funding for the special programs, but LiftFund COVID-19 does have loans to assist small businesses during this time.
LiftFund for Austin, Texas: special public and private partnerships to assist small businesses across Austin, Tx. Please note that there is limited funding for the special programs, but LiftFund COVID-19 does have loans to assist small businesses during this time.
PeopleFund: provides small business loans as well as assistance and education to people with otherwise limited access to such resources. PeopleFund is a Community Development Financial Institution (CDFI) and operates as a nonprofit 501(c)(3) serving all of Texas. This organization also has assistance for woman-owned businesses as well.
Advice, Tips, and the Pros and Cons of Small Business Loans for Austin, Texas Small Business Owners
As an Austin business owner, you should always begin your funding search with some essential questions: what is the purpose of acquiring funds, and what will it be used for? Do you know the obstacles that exist when getting approved?
Business lending is significantly different than consumer financing. Underwriting for business lending is much more risk-averse than consumer lending, so you need to take your time in looking through all the options that are available by lenders.
AdvancePoint Capital has the experience and has been very successful in helping Austin small business owners search for financing solutions easily and painlessly without wasting time or, more importantly, your hard-earned money. Our customer service is legendary, and you will not regret using AdvancePoint Capital as a resource.
How To Apply for Small Business Loans in Austin, TX?
Applying for small business loans in Austin is easy with AdvancePoint Capital. Our marketplace is simple to navigate and offers a streamlined application process with decisions in hours, not days. Start with this online form, fill out the short application page, wait a few hours for your approval, and then get your funding! Or, you can call our toll free phone number and speak to a loan agent right away. See the benefits of working with AdvancePoint and take the first steps in the loan process so that you can make a better and informed decision.
Contact AdvancePoint Capital and Get your Quote Today by filling out our simple form and contact us.