5 Small Business Loans in Texas You Need to Know
Wed | March 2024
Texas' booming small business scene (over 3.2 million strong!) It is exciting and expanding. But, getting working capital can feel challenging for Texan entrepreneurs. This guide is your map to getting the business funding you need! We'll cover the top five ways to finance a business in Texas.
These include SBA business loans, LiftFund, and PeopleFund. Also, there are traditional bank loans and revenue-based financing. We'll break down the pros and cons of each option so you can find the perfect fit to fuel your small business in Texas.
Ready to find the business funding your business needs? Let's get started!
1. SBA Business Loans in Texas
The SBA is a government agency. It provides financing for small businesses that need capital to grow. With SBA Loans, small businesses in Texas can secure up to $5 million. Repayment terms range from 7 to 25 years. This gives you flexibility to manage your repayments.
Here's what you need to qualify:
Your business must meet the SBA's small business size standards (based on industry).
A strong credit score (generally 680 or higher) is helpful.
A solid business plan demonstrating your ability to repay the loan.
Here's what makes SBA Loans a good option:
Lower interest rates compared to some other business loan options.
SBA loans come with longer repayment terms, so you can spread out your payments over a longer period. This helps you manage your cash flow better.
You can use it for various business needs (e.g., real estate, equipment).
Things to Consider:
Lengthy application process: Getting approved for an SBA loan can take several months.
Strict eligibility requirements: Businesses must meet specific size standards and have a good credit score.
Collateral: Depending on the loan program, you might need to secure the business loan with personal or business assets.
You can learn more about the specific requirements and types of business loans at the U.S. Small Business Administration website.
2. LiftFund
Lift Fund is a nonprofit that helps small businesses, startups, and women-led companies get the capital they need to grow. This organization offers different loan options ranging from $500 to $500,000. They have a 9.9% interest program, flexible payment terms (5 to 10 years), and a fast application process. Additionally, lower promotional rates may be available for qualified areas and businesses.
Here's what makes Lift Fund a good option:
Smaller loan options: Great for startups or businesses needing less capital.
Support for women-owned businesses: Offers resources and guidance tailored to this audience.
Technical assistance: Provides valuable training and support beyond just financing.
Things to Consider:
Potential higher interest rates: Borrowers with lower credit scores might face higher rates.
Application process: Lift Fund tries to be accessible, but paperwork is required. It includes essential business documentation and financial details.
Check out Lift Fund's website for details on eligibility and applying.
3. PeopleFund
PeopleFund is a non-profit organization that empowers underserved communities in Texas by providing access to capital and educational programs. They offer small business loans up to $25,000 with competitive interest rates (7% - 15%) and flexible repayment terms (up to 7 years).
Here's what makes PeopleFund a good option:
Focus on underserved communities: Provides resources and support tailored to these businesses.
Smaller loan options: Great for startups or businesses needing less capital.
Things to Consider:
Potentially stricter requirements: PeopleFund might be tougher to qualify for than other funders. They might ask for a business plan, a 15% personal investment, and collateral.
Application process: PeopleFund aims to be accessible for small businesses. But it may require several documents. These could include a business plan, tax returns, and financial statements.
Visit People Fund’s website to learn more about their eligibility requirements and the application process.
4. Bank of America
Bank of America is a traditional bank. It offers diverse financing for small businesses, including lines of credit. It's an ideal choice for businesses seeking the benefit of face-to-face support. Here's what you need to know:
Bank of America has three common business loan options:
Business Advantage Credit Line: This unsecured line of credit doesn't require collateral.
Business Advantage Credit Line Cash Secured: For this secured line of credit, you'll need to provide a deposit as security.
Business Advantage Term Loan: An unsecured loan featuring a fixed repayment term.
Here's what makes Bank of America a good option:
Get in-person support. Benefit from personalized advice from a dedicated loan officer. They will help you throughout the application.
General Eligibility Criteria (Note: Criteria may vary by loan type):
Credit Score: A personal credit score of 700 or higher is typically needed.
Revenue: Annual revenue requirements range from $50,000 to $100,000.
Business Age: Your business should have been operational for at least 2 years.
Things to Consider:
Expect a long application process. You'll need financial statements, tax returns, and a detailed business plan.
Watch out for origination fees, application fees, and other costs related to the business loan.
Bank of America is good for established businesses. They focus on direct support and offer many financing options. The application process might be more complicated than other options. Weigh the benefits against the prerequisites and costs. Do this to decide if Bank of America fits your financing needs.
5. Revenue-Based Financing in Texas
This financing option is a good fit for businesses with ups and downs in their monthly income. Traditional loans need you to repay a fixed amount each month. Revenue-Based Financing (RBF) works differently. With RBF, you borrow money from an investor and then repay them a percentage of your monthly sales. This way, if your business has a slow month, you make a smaller repayment. If you have a strong sales month, your repayment is larger. It's like your loan payment adjusts itself based on how much money your business brings in.
Here's what makes Revenue-Based Financing a good option:
Adaptability: Repayments scale with your revenue, making it easier to manage during slow periods.
Faster funding: Compared to traditional loans, RBF can quickly get you the capital you need.
Preserve ownership: You don't give up equity in your business.
More straightforward application: The application process typically requires less documentation than traditional business loans.
Things to Consider:
It is usually expensive money. You get a lot of benefits with this product, and to a degree you pay for it.
For more information, see Revenue-Based Financing: Grow Your Business Without Traditional Debt.
One Park Financials’ Revenue-Based Financing
One Park Financial (OPF) offers a streamlined RBF solution with several advantages:
Fast funding: Receive funding within 72 hours upon approval.
No personal asset exposure: Your personal and business assets are protected.
Minimal documentation: The required documentation includes a one-page application form, a 3 months of bank statements, and a photo of your ID.
Easy application: Follow the next steps:
Apply Online or by phone.
In 2 minutes you will get pre-qualified.
Talk with our experts and provide the documents above (they will help you make this easy).
Receive the offer in less than 24 hours.
You could get funded that very same day.
Finance Your Texas Dream
Finding the right financing is crucial in driving your small business forward. In this guide, we've covered five key financing options. We've shown their benefits and factors to consider. Whether it’s the proven reliability of SBA loans or the flexibility of revenue-based financing. There’s a solution for your business and your objectives.
As you look at these opportunities, think about your needs. When you're considering these choices, follow these three steps:
Figure out your goals: What do you want your business to achieve?
Check out your options: Learn about each loan type and see what fits your needs.
Pick the best fit: Choose the best financing for your situation.
Ready to begin? Explore this guide and the resources here to understand your options.
Start securing your success today!
Disclaimer: The content of this post has been prepared for informational purposes only. It is not intended to provide and should not be relied on for tax, legal, or accounting advice. Consult with your tax, legal, and accounting advisor before engaging in any transaction.