Texas, the Lone Star State, is the largest of the 48 contiguous United States with an estimated population of 29 million. Texas has three cities with more than 1 million people: Dallas, Houston, and San Antonio. These three cities consistently rank in the top 10 most populated cities in the country. There are also three cities with a population of over 500,000, which are El Paso, Fort Worth, and the capital: Austin. In total, Texas has 6 cities that are among the 25 largest in the U.S.

Texas is a powerhouse economically, being the 10th largest economy among all nations of the world. Texas regularly ranks as one of the best states for business. Known in the business community as a business-friendly climate, Texas provides help to small businesses in the form of no corporate income tax and no personal income tax—along with a highly skilled workforce, easy access to global markets, robust infrastructure, and predictable regulations.

How to Acquire a Small Business Loan in Texas: What Resources and Loan Programs Are Available to Help Me Grow My Business?

With all that said, small businesses in Texas have the same challenges as other businesses in other states, relating to access to capital from traditional banks. The good news is there is a lot of help and alternative options available for small business owners. AdvancePoint Capital has a marketplace full of small business funding alternatives and resources for Texas small businesses.

The 10 Best Small Business Financing Options for Texas

Long Term Small Business Loans in Texas

Long term small business loans are defined as a business loan with a duration of two years or more. The features include a fixed lump sum upfront, over a fixed period of time, with principal & interest charges. Small businesses cannot draw money as they go, like a business line of credit, so it is not used for cash flow. Long term business loans are predominantly used for business expansion and growth or to finance large long term projects.

Product Overview

Rates: Interest rates starting at 6.50%

Terms: 2 to 10 years

Fees: 0% to 3% origination fees

Payments: Monthly or bi-weekly payments

Credit Standards: All types considered but good to excellent preferred

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Small Business Line of Credit for Texas Businesses

A Business line of credit operates just like a credit card in that it is a revolving line of credit. It is a flexible business financing product that allows business owners to draw and access funds on-demand or make purchases when needed. A business line of credit is a revolving line of credit that charges a principal & interest rate. Business lines of credit have a credit limit that cannot be exceeded without approval. Small business lines of credit require renewal, either semi-annually or annually, to be extended. 

Product Overview

Rates: Interest rates starting at 6.50% or treasury index plus 1% to 2.5%

Terms: Revolving line of credit.

Fees: Origination fees ranging from 0% to 3%

Payments: Monthly, bi-weekly or weekly payments

Credit Standards: All types considered. Good to excellent credit preferred.

Small Business Credit Cards for Texas Businesses

Business credit cards, like personal credit cards, are revolving credit lines that charge a principal & interest rate with a credit limit. A card is issued that can be used for making payments or purchases. Texas small businesses often utilize business credit cards in conjunction with other small business loan products.

Product Overview

Rates: Introductory rates starting at 0% up to 28.99% principal & interest

Terms: Open revolving line of credit with a limit

Fees: $0 to $500 annual fees

Payments: Flexible monthly payments

Credit Standards: Must have good to excellent credit and deep credit history

Short Term Small Business Loans for Texas Businesses

Short term small business loans are typically defined as business loans that are repaid with 6 to 18 months. Most small businesses choose this option when traditional business loans are not easily accessible. This small business loan features a lump sum of money offered upfront, with a fixed payback amount calculated using a factor rate over a short term of time. Rates are not principal & interest, but a “factor rate,” that costs more than traditional principal & interest small business loans.

This option is popular with small businesses because of the reduced documentation requirements and more relaxed credit tolerances compared to those of traditional business loans. Short term small business loans charge more for costs and are shorter-term, and the payments are more frequent to compensate for the higher risks small business lenders take on when offering this type of product.

Product Overview

Rates: Factor rate based on the funding amount range from 1.09% up to 1.45%

Terms: 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

Credit Standards: All credit types considered

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Business Cash Advance for Texas Businesses

Business Cash Advances (BCA) are also known as the Purchase of Future Sales Agreement. A BCA advances future sales at a discount to a business. The business is responsible for paying back a fixed amount known as the 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. Fixed costs do not function like traditional principal & interest loans.

The advance is repaid by taking a fixed percentage of future overall sales deposits called the specified percentage. The payments are collected by an ACH fixed daily or weekly payment deducted from a business bank account based on the specified percentage of future sales. At the end of every month, reconciliation can occur. If the fixed payments that are taken are more than the set future percentage of sales, a business owner can request a refund back to the business for overpayment so that the set specified percentage of sales collected for the business matches the sales volumes. Repayment continues until the payback amount is paid back in full. There is no term limit with advances as the fixed payback percentage is everchanging due to fluctuating future sales. A Business Cash Advance is not a loan, but an advance of future sales.

Product Overview

Rates: Factor rates range from 1.09% up to 1.45% and are risked based pricing

Terms: No term loan limits. Payments continue until paid in full based on specified percentage collection method and are dependent on future sales

Fees: 0% to 5% origination fees

Payments: Weekly or daily Monday-Friday fixed ACH payments

Credit Standards: Poor to excellent credit accepted. All credit considered.

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Merchant Cash Advance for Texas Businesses

A Merchant Cash Advance (MCA) is also known as a Purchase of Future Sales Agreement. MCA’s are very similar to BCA’s, but the most significant difference is the repayment process, which is connected to the future credit card sales instead of overall sales. MCA’s take a set percentage of future credit card sales at the time of batch of credit cards until the advance is paid back in full. Texas businesses find this option valuable when they have fluctuating sales and don’t want to be locked into a fixed payment that could negatively impact capital or margins of profit if sales decline or fluctuate. A Merchant Cash Advance is not a loan, but an advance of future sales.

Product Overview

Rates: 1.09% up to 1.45% factor rates

Terms: No term loan limits (payoff depends on future credit card sales)

Fees: Origination fees 0% to 3%

Payments: Set fixed percentage of future credit card sales withdrawn at the time of batch of credit card sales

Credit Standards: All credit considered from poor, fair, good, or excellent.

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Equipment Financing in Texas

Equipment loans or leasing provides for the purchase of equipment by securing the equipment as collateral. This loan or lease is commonly used by Texas small business owners that require equipment for the essential functions of the business. Credit evaluation requires the business owner to have very good to excellent credit to acquire equipment financing. However, the good news is limited paperwork is necessary to get approved.

Product Overview

Rates: Factor rate ranging from 1.09% up to 1.45%

Terms: No term loan limits, based on future sales

Fees: Origination fees range from 0% to 3%

Payments: Weekly or daily Monday-Friday fixed ACH payments

Credit Standards: All credit considered

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Small Business Administration (SBA) Loans in Texas

The Small Business Administration (SBA) provides programs, guidelines, and loan guarantees to approved lenders for businesses throughout the State of Texas. The Small Business Administration’s mission is to help Americans start, build, and grow their businesses successfully. 

The Small Business Administration is not a lender and does not loan to small businesses directly. They provide guarantees to those approved lenders to recover a certain percentage (up to 80%) of the small business loan if it were to default. This guarantee gives the approved lender ability to take on the risk of business lending under Small Business Administration terms, which they might not ordinarily do on their own. Small Business Administration loans are highly sought after by Texas small businesses but, unfortunately, have low approval rates due to the requirements and guidelines and also high default rates. The SBA recently launched a new government program called the SBA Paycheck Protection Program (PPP) to help support small businesses during the COVID-19 crisis. Please contact AdvancePoint Capital for additional information.

Small Business Administration Loan Programs for Small Businesses:

SBA Standard 7(a) Loan Program

The SBA standard 7(a) loan program is the SBA’s primary program for providing financial assistance to small businesses. The terms and conditions, like the guaranteed percentage and loan amount, may vary by the type of loans to small businesses.

Maximium Loan Amount: 5 Million

Type of Funding: Revolving lines of credit up to 10 years

Collateral: Lenders are not required to take collateral for loans up to $25,000. For loans above $350,000, the SBA requires that the lender collateralize the loan to the maximum extent possible up to the loan amount. If business fixed assets do not “fully secure” the loan, the lender may include trading assets and must take available equity in the personal real estate (residential real estate and investment real estate) of the principals as collateral.

Use of Funds: Access to Working Capital

SBA 504 Loan Program

The SBA 504 Loan program is a powerful economic development loan program that offers small businesses another avenue for business financing while promoting business growth and job creation. 504 Loans are typically structured with SBA providing 40% of the total project costs, a participating lender covering up to 50% of the total project costs, and the borrower contributing 10% of the project costs. Under certain circumstances, a borrower may be required to contribute up to 20% of the total project costs.

Total SBA 504 projects costs for a project may include the following (eligibility requirements apply to the 504 portions of the project as well as the participating lending portion):

  • Building Purchase
  • Land
  • Renovation
  • Furniture and Equipment
  • Soft Costs

The use of proceeds from SBA 504 Loans must be used for fixed assets (and certain soft costs), including:

  • The purchase of existing buildings;
  • The purchase of land and land improvements, including grading, street improvements, utilities, parking lots and landscaping;
  • The construction of new facilities or modernizing, renovating or converting existing facilities;
  • The purchase of long-term machinery*; or
  • The refinancing of debt in connection with an expansion of the business through new or renovated facilities or equipment

*Note: The SBA 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing (except for projects with an expansion component or that meet the temporary refinancing provisions of the Small Business Jobs Act of 2010). Real estate may be required to secure financing with certain SBA loans.

Product Overview

Rates: Interest rates starting at 6.50%

Terms: Loan terms from 3 to 25 years

Fees: Origination fees 0% to 3%

Payments: Fixed monthly payments

Credit Standards: Good to excellent credit preferred

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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.

U.S. Small Business Administration

Small Business Resources Guide Dallas/Fort Worth Area Edition
View the Dallas/Ft. Worth Small Business Resource Guide for information and assistance in growing your local business, exploring funding options, and contracting.

U.S. (SBA) U.S. Small Business Administration Dallas/Fort Worth District Office

U.S. Small Business Administration

How to Grow Your Business in Houston
View the Houston Small Business Resource Guide for information and assistance in growing your local business, exploring funding options, and contracting.

U.S. (SBA) U.S. Small Business Administration Houston District Office

U.S. Small Business Administration

How to Grow Your Business in San Antonio
View the San Antonio Small Business Resource Guide for information and assistance in growing your local business, exploring funding options, and contracting.

Invoice Financing in Texas

Invoice financing offers Texas-based small businesses the ability to increase the rate of cash flow of the business by getting an advance on invoices that have been issued to clients but not collected. This solution provides cash quickly because there is no need to wait for outstanding invoices to be paid by the client with invoice financing in place. Invoice financing has affordable costs ranging from a 1% to 2.5% fee based on the face value of the invoice advanced. Invoice financing is not a loan, but and an advance off of a specific invoice.

Product Overview

Rates: None

Terms: No term loan limits

Fees: 1% to 3% fee based on the invoice. Monthly service fees depending on the volume of invoices factored

Credit Standards: Credit of the clients need to be favorable NOT the business owner advancing off invoices

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Purchase Order Financing in Texas

Purchase Order financing offers Texas-based small businesses the ability to raise capital 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 send the balance of the invoice to your business. It does not matter whether you are a startup or have an established business in Texas to qualify for this product. Many new small businesses can receive small business funding on their first transaction as a new business. Purchase order financing is not a loan but an advance of a specific purchase order.

Product Overview

Rates: None

Terms: No term loan limits

Fees: 1% to 3% fee for each purchase order. Monthly service fees depending on volume may also apply

Credit Standards: All parties need favorable business credit history but all credit considered

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The fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form.

Why Does Your Texas Business Need a Small Business Loan?

The most common reasons Texas small businesses acquire loans to help their business:

  • Working Capital        
  • Loans for Equipment        
  • Expand and grow a business 
  • Access to Capital for Cash Flow shortages        
  • Businesses that have emergencies and need financial help       
  • Advertising and Marketing

Frequently Asked Questions

Are Small Business Loans in Texas difficult to obtain?

It is not difficult to obtain business loans in Texas for small businesses. AdvancePoint Capital’s business finance marketplace provides loans to small businesses that need access to capital.

Can I qualify for Small Business Loans in Texas if I have bad credit?

There are many business loans for small businesses with bad credit. Products and terms will vary depending on the different levels of bad credit, financial condition, and most recent cash flow. Pricing and costs will depend on how bad your credit is.  

Can I get a start-up working capital loan in the Texas area?

Getting startup business loans in Texas like any other State is complicated and challenging. SBA does have programs for startup businesses. Your search will need to be looking at non-traditional means to raise capital to start a business like private loans or investors when searching for startup capital loans.

The Bottom Line: Advice, Resources, Tips, Help, and Warnings about Small Business Loans

As a business owner, you should always begin the process by understanding the purpose and use of the loan you are trying to acquire for your business. Do you know what challenges may exist in getting approved?

Do not take a one size fits all approach, because that’s just not how business loans work. Realize business financing is significantly different than consumer financing. Always do a cost versus benefit analysis when choosing a business funding option. Make sure the business loan originator has access to capital and has a variety of resources, loan programs, and services available to assist you in getting the correct information to make a decision.

Texas Economic Development-Financing and Capital- The Governor’s Office of Small Business Assistance works closely with a variety of partners to facilitate small businesses accessing capital. Offering the following resources; Product Development and Small Business Incubator Fund, Non-Profit Lenders, Small Business Administration Loan Programs, Capital Access Program, Skills for Small Business, and Federal Grants and Resources.

PeopleFund- PeopleFund’s small business loans help entrepreneurs enhance their businesses and keep local economies growing. With financing available for equipment purchases, permanent working capital term loans, and revolving lines of credit, we provide access to capital with low down payment or equity contribution, flexible underwriting, no pre-payment penalties, and a lending team dedicated to help you succeed through one-on-one training and business assistance & education. They focus on women, minorities, veterans, and businesses in low to moderate income areas to make sure everyone has a chance at the American Dream.

The State of Texas, Office of the Governor’s Small Business Handbook

 

The State of Texas, Office of the Governor’s Texas Startup Resources Directory

 

 

How to Apply for Small Business Loan in Texas?

Our services at AdvancePoint Capital provide loans to small businesses. We can assist you in finding the financing solution you need to help your business grow.

It’s simple to apply. Start with this online form on our website, then fill out the short application page, wait a few hours for your approval, and then get your money!

AdvancePoint Capital

The fast, convenient, and straightforward way to get the business loan you need for your business – now!
Get your quote today by filling out our simple form.

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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.