texas

The Best Options for a Small Business Loan in Texas

Starting a small business can be an exciting and also daunting venture. The most significant thing holding entrepreneurs back is the financial input required to launch and run a small business. This is especially true if your venture is not established or not bringing in its potential revenue yet. In this guide, we will explore the different Texas small business loans available.

At a glance Texas is the second-largest state in the United States, so it is no surprise that approximately 2.6 million small businesses operate here. And there is no reason why your small business can’t be a part of this statistic. The average amount that Texas entrepreneurs receive from financial lenders is $65,093. In this article, we will cover the local business lending options in detail.

Top 5 Texas Small Business Loan Options

Next, we will look at the top five Texas small business loan options available to local entrepreneurs.

1. Business and Community Lenders of Texas

Business and Community Lenders (BCL) of Texas are also referred to as a non-profit organization based in Texas. Their goal is to provide lending, homeownership, entrepreneurship and community development assistance across the state of Texas. 

BCL offers many different types of loan programs, making it easy for you to identify which option will work for your small business and its needs. Here are some of the loan programs BCL offers:

  • New Business Lending: this option is for you if your business is new and hasn’t been running for more than two years. The amount available is between $20,000 and $50,000. This loan can be used to purchase equipment, inventory and other business essentials.
  • Small and Diverse Growth Funds: this option is available to women and business owners from minority groups. If you fall into this category, you can apply for a micro-loan of up to $50,000.
  • Business Growth Fund: this option is for you if your small business is older than two years. You can apply for an amount between $50,000 and $300,000 with this option.
  • Rural Business Lending: for this option, BCL partnered with the US Department of Agriculture to provide loans up to $250,000 to small businesses located in rural towns (towns with a population under 50,000) across Texas.
  • SBA Loans: for this option, BCL partnered with the US Small Business Administration to provide 504 loans to assist entrepreneurs in acquiring equipment or real estate.

2. Texas Capital Bank Small Business Loans

Texas Capital Bank has branches in all the major cities across Texas. This makes them a very convenient bank to apply for small business loans. You can also apply for a much more considerable amount of capital with Texas Capital Bank with an amount of up to $750,000. 

This bank also offers SBA (Small Business Administration) loans and term loans, lines of credit, trade finance for import and export business, and equipment financing. They also offer financing to companies in hard to fund industries such as real estate, brokering, gas and oil. Texas Capital Bank also offers asset-based funding, meaning that your loan is collateralized by the businesses inventory, accounts receivable, and equipment. 

However, this is a bank, and as such, their credit and qualification requirements are stricter than loans from a non-profit organization. 

3. PeopleFund

This is a non-profit organization that aims to provide support to small businesses in underserved communities. This includes small businesses launched by women, people of color, veterans or companies located in low-income areas.

A few other benefits of PeopleFund are:

  • Lower down payments
  • No prepayment penalties
  • Flexible collateral and underwriting requirements
  • Group and one-on-one business training

PeopleFund also participates in Small Business Administration programs. They can also offer loans up to $350,000, with a maximum of seven years to pay back the loan. Their interest rates are between 7% - 15%, with discounts for business owners from underserved communities.

4. Texas Trust Credit Union

Credit Union business loans are often overlooked as you need to be a member of the credit union to apply for a loan. However, loans through credit unions often provide a more competitive interest rate and a more flexible underwriting process.

If your company is in Denton, Dallas, Henderson, Ellis, Tom Green county, Tarrant, or Johnson, you can become a Texas Trust Credit Union member. 

The Texas Trust Credit Union provides term loans, SBA loans, lines of credit, construction financing and even real estate loans. This is very beneficial for property and real estate developers. You also have the option of applying for a cash-back business credit card through Texas Trust Credit Union to support you with ongoing purchases.

5. Business Investment Growth Austin Microloans

This Texas small business loan provider, known as BiG Austin, is a microlender that provides small business loans to a few different Texas communities. Your company needs to be in one of the following counties to apply for a loan with BiG Austin: Burnet, Blanco, Bell, Bastrop, Hays, Gillespie, Lee, Llano, Lampasas, San Saba, Milam, McCulloch, Mason, Williamson, or Travis.

Small businesses with at least three months of trading history can apply for up to $15,000. Businesses with at least one year of operating history can apply for up to $50,000. The repayment terms with BiG Austin spans between one to six years. 

However, for new businesses, Big Austin requires that the owner has a second income source such as spousal income, retirement income or a second job.

See below a summary of the above information.

Summary of Top 5 Texas Small Business Loan Provider

Loan Provider

Maximum Loan Amount

Repayment Term

% Interest

Business and Community Lenders of Texas

$300,000

1-7 years

5.5% - 9.75%

Texas Capital Bank Small Business Loans

$750,000

1-7 years

5.5% - 9.75%

PeopleFund

$350,000

7 years

7%-15%

Texas Trust Credit Union

$350,000

1-7 years

5.5% - 9.75%

Business Investment Growth Austin Microloans

$50,000

1-6 years

5.5% - 9.75%

Top Online Texas Small Business Loan Options

It is also essential to know that you are not only limited to looking at the local options available for Texas small business loans. If you cannot find a provider that can assist with your requirements or if you do not meet theirs, online loan providers can be a valuable option. 

Let’s look at a few of the top online business loan providers.

1. Fundbox

Fundbox is an excellent option for entrepreneurs with a low credit score struggling to get approved for a loan with other institutions. Many other lenders require a credit score of at least 650 to qualify, whereas Fundbox only requires a score of 500. 

Fundbox also offers a rapid and straightforward application process. All you need to do is have your business registered and then link your accounting software with the platform. They do the rest. Also, once approved, the funds can be released quickly, sometimes even by the next day. This is a great benefit for small businesses in a financial pinch.

2. Fundera

Fundera is a great option if you are looking for a loan but don’t have a lot of time to research and look into all the different options available. It is important to note that when applying for a loan through Fundera, your funds, once approved, will not come from Fundera as it only operates as an introducer to the types of loans you qualify for from other providers.

Fundera can also help new start-ups that do not yet have a track record or previous years accounts as support for their application. Since Fundera works very closely with their partners and already have an established relationship with them, they can negotiate the best possible deals for you.

3. OnDeck

OnDeck specializes in small loans. You can apply for loans between $5000 to $500,000, meaning that these loans should be able to cover most of your business’s needs. OnDeck also prides itself on fast service. You can hear back on your application’s status very quickly, in some cases within 24 hours. Once approved, the funds will also be released to you within a few days.

OnDeck also provides you with flexible plans that you can make work for your business. Along with very dedicated customer support available to you throughout the process to help make it effortless and straightforward.

Additional Texas Small Business Financial Resources

Financial capital is critical for any small business to become a success. If you need more capital, you may think that a Texas small business loan is your only option. However, there are other options available in Texas, as well. These come in the form of grants.

The most significant difference between a loan and a grant is that you have to pay back a loan, whereas, with a grant, you don’t. Bear in mind, though, that a grant has its restrictions and requirements that you need to adhere to.

Let’s take a look at some of the grant options available in Texas.

1. Texas Enterprise Fund Grant

This grant is available to businesses that set up in Texas and compete with other states. Your business must employ at least 75 full-time jobs to local citizens to apply for this grant if your business is in a city, and 25 if it’s located in a rural town.

The size of the grant is directly tied to the amount of staff on your payroll.

2. Texas Workforce Commission Skills for Small Business Grants

This grant is available to help businesses cover the costs of training their employees. As the business owner, you will work directly with colleges or universities and choose which course you would like your employees to take, and the grant will provide the funding to cover these costs.

For new employees, you can be covered up to $1800, and employees who have been with the business for more than a year are covered up to $900. However, it is essential to note that these training courses must fall within the targeted industries as selected by the Texas Governor. 

3. Texas Department of Agriculture Grants

Don’t discount this grant yet as it is not only for a farming business. The Texas Department of Agriculture offers a few different grant programs. Some of these programs are not related to farming. For example, one program provides grants to companies designing specialized crops with better food safety and nutrition. Another grant is offered to businesses that develop nutrition education programs for children.

Other Resources for Texas Small Businesses

Although funding and financial assistance are critical for businesses, new businesses can benefit greatly from other resources such as mentorships, coaching and networking opportunities.

Let’s take a look at some of these options in Texas.

Local Texas SCORE Chapter

SCORE or Service Corps Of Retired Executives offers a mentorship program. A new business can be matched up with a business mentor within your industry. These mentors can then assist you with formulating a business plan, setting up your financial, accounting or legal help, as well as other aspects of your new business.

Texas Chamber of Commerce

These chambers often hold networking functions for new businesses and conferences and training workshops which can be very beneficial for a new business.

Texas Small Business Development Center

This development center provides free one-on-one business consulting services. These consultants are local industry experts to help you make better business decisions.

How to Prepare for a Texas Small Business Loan

There are a few critical things you will need to apply for a small business loan. Below are some of the things you need.

  • A business plan
  • Good credit score
  • Business revenue

The Bottom Line

There are a few different lending options available for small businesses in Texas. You can apply for Texas small business loans through these banks and non-profit organizations. If these are not viable options for you, you can make use of online lenders. There are also other resources and financial support options available to entrepreneurs in Texas. 

As a small business owner in Texas, you have many options available to help launch and grow your business.