Texas Small Business Loans

Small businesses are a major part of Texas communities. Whether it’s a favorite local brewery or salon you’ve visited since you were a kid, supporting small business is something we should all go out of our way to do. Small businesses provide jobs, keep money in circulation, drive innovation, and contribute to economic growth and development.

In the state of Texas, this statement is especially true. Texas is a hotbed of economic growth and is known for being a very popular place to own and operate a small business.

The rate of lending via small business loans has been increasing in the state since 2010. And in 2019, the total reported new lending to businesses via loans of $1 million or less reached more than $23 billion.

45% of the state’s workforce (nearly 5 million Texans) are employed by a small business operation.

We’ve compiled a quick guide for small business owners in the state of Texas to learn more about business loans, grants, and other forms of financing and resources available to help your business.

How a loan can help your small business in Texas

Loans can help your small business in Texas in so many ways. Your personal business needs can vary, so before taking out a loan make sure you determine its purpose. 

When you don’t have the funds needed to cover a purchase, expense, or investment upfront, taking out a small business loan can help your business. Small business loans help companies gain access to the capital they need to cover a variety of financial obligations from start-up costs and operating expenses to emergencies and expansion costs.

Some of the most popular uses for business loans include equipment purchases, real estate transactions, staffing needs, marketing and advertising costs, and day-to-day expenses.

Types of small business financing options in Texas

In Texas, there are many lenders that can help small businesses secure funding. While you’ll want to work with a reputable lender, you’ll also want to know what type of loan you’re pursuing. Here are some types of small business financing available in Texas.

• Term Loans: Business term loans are a very popular financing option and are offered through banks, credit unions, and online lenders. Term loans are a form of installment loan that allow borrowers to receive a lump sum of cash that is repaid in equal monthly installments. Interest rates may be fixed or variable.
• SBA Loans: The Small Business Administration (SBA) is an independent agency of the federal government. Although the SBA does not offer loans directly through the agency, they guarantee loans offered through a network of partner financial institutions. Banks that offer SBA loans may offer microloans, equipment loans, and real estate loans. SBA loans are typically easier to qualify for and carry lower interest rates than other types of loans, making them a popular option for those who may have been turned down for a loan elsewhere. However, prepare for a long application process and gather financial documents and clean up your business plan because you’ll probably need to submit them.
• Online Business Loans: The internet provides business owners with more opportunity. This includes the opportunity to lock in the best deal on a business loan. Online lenders often have less overhead, therefore they can offer more competitive rates and terms. When dealing in the online space, always verify the legitimacy of the lender or work with a network of vetted lenders. At PrimeRates you can compare business loan offers from a network of fully vetted and approved lenders. 
• Commercial Business Loans: When it comes to financing large commercial purchases, commercial business loans are the way to go. These loans allow companies to make purchases such as commercial vehicles, commercial property, commercial equipment and commercial land.  This type of loan can be found from banks, credit unions, and even online lenders.
• Business Credit Card & Lines of Credit: Additionally, business owners may choose to take advantage of credit cards and lines of credit instead of a loan. Many businesses prefer using credit due to the easy access to ongoing funds to cover emergencies or daily expenses. Some advantages of credit over loans include an easier application process and faster approval. In addition, if you can find a deal on a card with an introductory rate of 0% APR, you won’t pay interest for several months or even years.

Small business financing resources in Texas

The U.S. Small Business Administration (SBA) is a good starting point for businesses in any state to access resources and information about financing options including loans, investment capital, disaster assistance, surety bonds, and grants. SBA-backed loans are a popular option for many entrepreneurs.

In addition, business owners in Texas can take advantage of the following small business resources:

• The Texas Small Business Development Center provides a variety of workshops, training programs and other resources to businesses in the state of Texas. A team of certified counselors is available to help business owners review the financing options available to them. The Texas SBDC also publishes a comprehensive "Guide to Starting and Operating a Small Business.”
• The Governor's Office assists local small businesses through advocacy, education, support, and technical assistance. The state of Texas desires to help business owners succeed with a variety of resources including The Governor's Small Business Resource Portal and The Governor's Small Business Handbook as well as The Governor’s Small Business Webinar Resource Library.
• Another option for small businesses is to find a Community Development Financial Institution (CDFI). These non-profit lenders offer favorable terms and low interest rates as well as mentoring and workshops. CDFIs focus on lending to small businesses, entrepreneurs, nonprofit organizations, and more. Some non-profit lenders in Texas include: BCL of Texas, LiftFund, and PeopleFund. You can also find a CDFI near you using this online locator.
• The Texas Secretary of State website has a comprehensive Guides and Resources page for business owners to access information they need to succeed in the state of Texas.
  

Small business grants available in Texas

In contrast to loans, grants are gifts of financial assistance that do not need to be paid back. Small business grants are available to business owners for the success of their business and the community.

Many grant programs today focus on aiding certain sectors of the community such as agricultural businesses or minority-owned businesses.

Small business grants can be obtained through government agencies, corporations, and organizations.

There are several places Texas business owners can begin looking for small business grants:

• The State Trade Expansion Program (STEP) Grant provides grants in amounts up to $15,000 to small businesses seeking to expand through international business development activities (such as attending trade shows or updating marketing materials for an international audience).
• The Young Farmer Grant is available to Texas agricultural operations with a 1:1 match requirement. This means that participating farmers must raise their own funds to match the grant amount. For example, if a farmer has a total need of $15,000, they must raise $7,500 which the grant will then match to meet the goal.
• The Texas Workforce Commission runs the Skills for Small Business grant program designed to help small businesses train and equip new workers. Eligible companies can receive up to $1,800 for each new employee and $900 for each existing employee.
• The Texas Enterprise Fund is a grant program made available to incentivize business growth in the state of Texas. To be eligible, businesses must generate at least 75 full-time jobs in urban areas (or 25 in rural areas) with wages at or above the average for the county, have the support of local government, and be able to demonstrate a good chance for the return on investment.
• The Southern Smoke Emergency Relief Program makes funds available to bars and restaurants in the state of Texas and their employees. There is no grant cycle or deadline to apply.
• Business owners can also check the portal at Texas Grant Watch for grant opportunities.

Federal agencies like the SBA and USDA offer small business grants to qualified business owners.

In addition to the resources above, business owners can also check with state agencies such as the Texas Department of Education and Texas Department of Transportation. Lastly, grants may be available at the municipal or county level as well, so be sure to check the local area in which you live. (For example, the city of Alamo, Texas offers the Alamo Small Business Grant Program with awards up to $2,500.)

Tips for applying for a small business loan in Texas

Business owners residing in the state of Texas should take the following points into consideration when applying for a small business loan. Researching and being as prepared as possible can not only help you get approved for a loan, but at a better rate. 

• Consider your credit: Applicants for any type of loan need to be aware of their credit score and its limitations. Most lenders want to see a credit score of 660 and above in order to grant applicants access to the best deals and lowest interest rates. In the event that your credit is not up to par, you can take steps to improve your score before applying or consider using a cosigner.
• Create a detailed business plan: All small businesses should have a detailed written business plan. Not only will lenders most likely require this document when applying for a loan but having such a plan will also help your company succeed. A solid business plan should include key elements such as an executive summary, a marketing plan, a financial plan, and an operations plan.
• Gather supporting documentation: In addition to a detailed business plan, lenders may request additional paperwork proving the financial and legal status of your business. Gathering this information ahead of time can save you time on your application process. Some lenders may require a minimum length of time in business or a minimum annual revenue. Documentation that you might need to submit includes: profit and loss statements, financial projections, earnings reports, tax returns, and bank statements.
• Think outside the box: For some of the best deals on business loans, credit unions and online lenders offer an alternative option to traditional bank loans. Online lenders have fewer operating costs, and both credit unions and online lenders tend to have more lenient loan requirements, a faster application process, and lower interest rates than traditional banks. Credit union membership is typically based on your place of employment, your college, or your place of residency. So be sure to check out a few local credit unions near you to learn more about their membership requirements. The highest-rated credit unions in the state of Texas include Gulf Coast Educators Federal Credit Union, Texas Bay Credit Union, Houston Federal Credit Union, Texas Federal Credit Union, Neighborhood Credit Union, Texas Trust Credit Union, Premier America Credit Union, Firstmark Credit Union, Anheuser-Busch Employees' Credit Union, State Farm Federal Credit Union, and Navy Federal Credit Union.

Wrapping up

Small businesses are a reflection of an individual’s passion. Whether the business is passed down or built from scratch by the first generation, owning a small business can be so rewarding, but at times it may feel impossible to keep going. Rest assured though that the reward of pushing through is worth it. With small businesses providing jobs, attracting tourists, and contributing to the local economy, there are plenty of resources available in Texas. These resources can help your business grow and thrive. 

Business loans are frequently used by small businesses to help them reach the next level. Whether you need to replenish cash flow or invest in growth, business loans can be a valuable resource to help you defy the impossible. Before taking out a business loan though, you should explore the options available and compare rates. As a business owner it’s important to save when you can.

Compare rates and get funded

To compare rates and get the best deal on your Texas small business loan, check personalized offers at PrimeRates. By submitting one application, you can receive offers that your business actually qualifies for - without impacting your credit score. PrimeRates is committed to helping businesses thrive with a little help from our powerful network of lending partners. 

Unlock the best business loan offers in Texas. . . check offers online today!