Small Business Financing in Texas Guide
- April 16, 2018
- Posted by: Jeff Gitlen
- Category: Small Business Loans
Business in Texas is booming. While many states have seen a decline in population and business, Texas has seen only growth.
In fact, what sets the state apart from other regions is its potential for business growth and its relative financial support system. Texas is definitely open for business.
Both at the federal and state levels, there are a number of paths for startups, small businesses, and self-employed entrepreneurs to fund their next venture.
The options can include loans, grants, and private investors. Some are federally run programs; others are small business loans provided through regional banks. Each one has pros and cons worth considering before submitting your application when starting a business in Texas.
Online Small Business Lenders
Small Business Loans in Texas
Small business loans in Texas are an option for businesses entering into a slow period, who have encountered temporary financial difficulties, or who are about to expand. Business loans are a way to bridge the gap when other types of financial funding aren’t viable. However, businesses should be wary of taking on more debt if there are long-term risks to their financial stability.
Business and Community Lenders
BCL of Texas is a nonprofit dedicated to providing small startup businesses with the necessary capital for funding their goals. They are located with offices in Dallas and Austin, and statewide they can provide entrepreneurs with the necessary skills and information they might need for smart business decisions. Included, entrepreneurs can attend free classes, meet with specialists for coaching, and apply for small business loans. The loan amounts vary by the type of loan.
For example, loan products such as the Texas Small and Diverse Fund have loan amounts from $5,000 to $50,000. Larger loans are available through the Small Business Growth Fund (up to $300,000) and the SBA504 Loan Program (up to $5.5 million). Schedule an appointment with them for more information. BCL of Texas lends and works statewide in Texas.
Providing streamlined access to small business loans in Texas, they can provide loans up to $1 million. They focus on making the process as easy as possible for small businesses seeking funding. Enterprises can expect funding two days after approval. A poor business credit score is not an automatic disqualifier, and they base approvals on average monthly gross business volume. They provide business loans to cover a wide variety of needs, including mergers, business lines of credit, startup, construction loans, equipment financing and more.
Texas Capital Bank
A preferred Small Business Administration lender, Texas Capital Bank has decades of experience helping to fund small business ventures through a variety of avenues. They help businesses across many different sectors, including oil and gas, healthcare, private equity, manufacturers, property developers, and more. The business loans cover a wide variety of needs, including commercial real estate, construction or expansion, equipment needs, business acquisition and partner buyouts, and debt refinancing. Speak with one of their small business experts for more information.
U.S. Small Business Administration
This national service doesn’t provide funding itself but it matches lenders to entrepreneurs seeking funding. They have connections to over 800 nationwide lenders, making the process a one-stop-shop for small business owners seeking financial assistance. Their rates are lower with better overall terms than most bank loans. More information is available through the SBA website.
Small Business Grants in Texas
Grants are the best source of funding for any small business because they do not need to be repaid and do not require giving up partial ownership. Although the eligibility requirements can be restrictive, there may be a relevant grant for your sector that could make a big difference in meeting your business goals.
The Texas Enterprise Fund
This grant is geared toward increasing the competitive advantage of Texas companies bidding on projects within the state. There must be a significant job creation potential for the project; the bare minimum is 75 jobs. These grants ranged from $194,000 to $50 million in the past. There is no set application deadline; potential applicants are encouraged to explore all the eligibility requirements through the Texas Enterprise Fund website.
Young Farmer Grant
Open to young Texan farmers, between the ages of 18 to 46, who are seeking funding to expand or start an agricultural business. Must be U.S. citizens. This grant is a matching fund, which requires initial investment and capital from the applicant. Grants range from $5,000 to $20,000. The deadlines are twice yearly, in the spring and fall. When available, they are posted on the Texas Agriculture website.
The Texas Moving Image Industry Incentive Program
Focused on encouraging growth in the film production industry within the state. Grants vary from one project to another depending on budget. However, qualifying expenditures can include wages, invoices, and petty cash. Those interested should contact the Texas Film Commission for more information.
Skills Development Fund
This grant helps fund premier job training for employers and employees across the state. Not only does it improve the skills of the workforce, but it also helps design on-the-job training programs. The Skills Development Fund grants max out at $500,000 per business. Also, there is no set deadline. Contact the Texas Workforce Commission for more information.
Skills for Small Business
Another fund issued by the Texas Workforce Commission, this grant focuses on providing training for new hires in companies with under 100 employees. Grants cover the tuition and fees of new hires, up to $1,800. Incumbent employees can receive up to $900. There is no deadline for application, but contact the Texas Workforce Commission for more information.
Texas Capital Fund Infrastructure/Real Estate Programs
This grant does not provide funds directly to a small business but instead, provides funds to build the needed infrastructure within a community to support a new business venture. The funds go toward purchasing real estate or building infrastructure, which “must be owned by the community and leased to the business.” The grants range between $100,000 to $1,000,000. More information on the grant program is available through the Texas Department of Agriculture.
Conservation Innovation Grants
A national grant program which aims to stimulate innovation around conservation, especially in the agricultural sector. State-based awards are limited to $75,000. For more information, applicants are encouraged to contact the USDA Natural Resources Conservation Service.
The grant, issued by WomensNet, provides women in Texas small grants to pursue their business goals. WomensNet awards monthly grants of $1,000 and each of the winners has the chance to be awarded the year-end grant of $9,000. There are deadlines every month, and the application process is simple through the Amber Grants for Women website.
National Association for the Self-Employed
This nationally managed program awards up to $4,000 to self-employed business owners, to cover the costs of new investments into equipment, advertising, and product development, among other things. Applicants must be NASE member, with dues in good standing. Applications are accepted each season and awarded in January, April, July, October.
Small Business Investors in Texas
In some cases, seeking out a private investor is a better bet than a small business loan. Why? Because investors, who may take over partial ownership of the company, can offer their experience and extensive in addition to money. Especially for startups, this guidance can be a make-or-break experience.
Texas Investment Network
This network connects investors with small business startups looking to begin or expand their current business. Opportunities vary, and there are no commission rates once a partnership is made. The fee is a small one-time fee of $149. They fund all sectors, with a wide variety of eligibility requirements, as this is a private investment network.
A network of angel investors in Fort Worth, Texas, helps entrepreneurs who are seeking early-stage investment. Entrepreneurs can easily apply through their website. Application deadlines and meeting dates are also posted on their online calendar.
Getting Your Business Ready for Financing in Texas
Before getting started on your journey sourcing small business funds, there are a few pieces of information you’ll need to have during most application processes. Set aside the time to properly collect this information and to present it in a professional and accurate way. Every application will have a different set of requirements, but this list can help get you started:
- Basic business information including industry, years in business, experience, etc.
- Robust business plan
- Capital requirement
- Credit history
- Financial projections
- Current liabilities
- A detailed plan on how you intend to use the funds
What Kind of Financing Do You Need?
The competition for small business grants, especially in an economically booming state like Texas, is fierce. However, awards, when applicable to your type of business, are one of the best resources for financing in Texas. After all, they are free, and can even have some unexpected benefits such as free exposure and networking benefits. Exploring what grants are open to your small business should always be the first step toward funding your business goals.
If there are no grants available for your industry or within the timeframe you need financing, seek out alternatives. For example, finding appropriate investors can be beneficial, as they can prove guidance and advice along with your entrepreneurial journey. However, investors usually take partial ownership of your company and may give input into the daily operations, which some owners might not want.
The final option is a business loan, which means you’ll be paying it back plus interest. However, you will maintain complete control over your business from top to bottom. In the end, having a solid understanding of your business model, goals, and financials is the key to determining what option is best for you and your company.