The Ultimate Guide To Business Loans In Texas

Camino Financial30 Jan 2024
The Ultimate Guide To Business Loans In Texas
Business loans in Texas can fuel your company's growth and innovation. Fortunately, there's a wealth of financial options available that cater specifically to entrepreneurs like you. This guide will explore these choices, demystifying the process and shedding light on how to best navigate the world of business financing.

Best Business Loans You Can Get In Texas

Camino Financial

Camino Financial's logo Camino Financial takes pride in its mission to support small business owners. We help entrepreneurs who find it difficult to raise money from traditional financial institutions.
  • Amounts: $10,000 to $50,000
  • Terms: 24 months
  • Interest rates: competitive interest rates from 32% to 45%
  • Min credit score required: 670
Some of our benefits are:
  • Our loans don't require collateral.
  • We provide customer service in both English and Spanish.
Apply For A Business Loan!

Business Investment Growth Austin (BiGAustin) Microloans

BIGAustin logo BiGAustin caters specifically to startups and microenterprises. BiGAustin is a viable choice for those with lower credit scores.
  • Amounts: up to $15,000 for startups, up to $50,000 for existing businesses
  • Terms: 1 to 6 years
  • Collateral required
  • You only pay processing costs, which are minimal

PeopleFund

PeopleFund logo PeopleFund is a nonprofit lender with a focus on empowering Texas small businesses. Learn more about their SBA 504 loan:
  • Amounts: up to $5 million
  • Terms: 10 t 25 years
  • Interest rates: Prime of 8% + 4.55% to 5.10%

Bank Of Texas

Bank Of Texas logo This is one of the best banks for small business loans in Texas. Here is the information on their Working capital loan:
  • Amounts: not disclosed
  • Terms: 1-5 years
  • Interest rates: 5 to 10%
  • Min credit score required: 680

Fundbox

fundbox logo Fundbox offers an innovative line of credit for small businesses.
  • Amounts: up to $150,000
  • Terms: 3 or 6 months
  • Interest rates: starting at 4.66% for 3 months and 8.99% for 6 months
  • Min credit score required: 600

Wells Fargo

wells fargo logo Wells Fargo, a well-known national bank, provides loans for small businesses. Here is the information on their 7(a) loans:
  • Amounts: up to $5 million
  • Terms: 10 to 25 years
  • Interest rates: starting at 5.25%
  • Min credit score required: 660

Texas Trust Credit Union

Texas Trust Credit Union logo Texas Trust Credit Union provides different lending products for small businesses in Texas. Here are more details on their business credit cards:
  • APR: as low as 9.90%
  • Annual Fee: $0
  • Balance Transfer Fee: $0
  • Late Fee: $25

Business And Community Lenders (BCL) Of Texas

BCL Of Texas logo BCL of Texas is a local nonprofit lender offering various Texas small business loans. Here is the most important info on their products:
  • Texas Small & Diverse Growth Fund: $5,000 to $50,000
  • New Business Lending: $20,000 to $50,000

Texas Capital Bank

Texas Capital Bank logo Texas Capital Bank offers a wide range of business loans for all kinds of ventures. Learn more about their SBA loans:
  • Amounts: up to $750,000

Cadence Bank

Cadence Bank logo Cadence Bank offers a variety of business lending options, like:
  • business loans
  • lines of credit
  • SBA loans
  • credit cards

How To Choose The Right Loan

Getting a business loan in Texas is a significant decision that requires careful thought and planning. Here's what you need to consider:
  1. Loan Purpose. The purpose will direct your choice.
  2. Loan Amount. Be realistic and consider your repayment ability.
  3. Repayment Terms. Short-term or long-term? Each has implications on your monthly payments and interest cost.
  4. Interest Rates. This greatly affects the total cost of your loan. The lower the rate, the less you'll pay overall.
  5. Lender's Reputation. Look for a lender with a positive reputation who understands and supports small businesses.

Small Business Loan Requirements In Texas

  • Credit score. Some lenders may approve loans even if you have bad credit, but usually, lenders prefer a score of 680 or above.
  • Annual revenue. Lenders want to know if your business has enough profits to pay for the loan. Usually, they'll require you to have an annual revenue of usually $100,000.
  • Time in business. This works as a risk assessment measure. A longer-operating business often indicates a proven revenue track record and stability. Lenders usually require 1 to 2 years.
  • Documentation. You must have all your legal paperwork in order, such as licenses and permits.
  • Business plan. This can significantly increase your chances of approval. Lenders want to see that you have a viable plan for using the loan and generating revenue.
Remember, requirements can vary from lender to lender, so it's best to do your research before applying. At Camino Financial, we have lower requirements. For example:
  • our minimum credit score is 670
  • you only need 12 months in business
  • your annual revenue can be $30,000

How Much Funding Does Your Business Need?

Deciding on the right amount of funding you need, even before applying, is crucial. You don't want to borrow less than you need, leading to a cash crunch, or more than you need, leading to unnecessary debt. So, how can you calculate the right amount?
  1. Start by projecting your future cash flows.
  2. Analyze your expenses and income and forecast them for the future.
  3. Factor in any potential hurdles, like slow seasons, that might affect your income.
  4. Consider the costs of new projects, expansions, or marketing efforts.
  5. Once you have a clear picture of your financial needs, make a more informed decision when applying for loans for small businesses in Texas.

How To Get A Business Loan

Ready to apply for your Texas small business loan? Excellent! Here's a step-by-step guide to get you started:
  1. Understand Your Needs. This includes knowing how much funding you need and what type of loan would be the most suitable.
  2. Review Your Credit Score. If it's low, you might want to work on improving it before applying or consider lenders offering loans for bad credit.
  3. Prepare a Solid Business Plan. The document should clearly outline how you plan to use the loan and how it will help grow your business.
  4. Apply. You're now ready to apply for your chosen Texas business loans. You can usually do this online or in person.
  5. Share Necessary Documents. These might include financial statements, tax returns, business licenses, etc. Each lender will have its specific requirements.
  6. Wait for Approval. Once you've submitted your application, it can take anywhere from a few days to a few weeks to get a response. Be patient, and use this time to continue growing your business.
Apply For A Business Loan!

Types Of Commercial Loans You Can Find In Texas

Each of these loan options comes with its own pros and cons, and the best choice depends on your specific business needs and circumstances.

SBA Loans

Small Business Administration (SBA) loans are partially guaranteed by the federal government, which can make them more accessible for small businesses. They offer flexible terms, larger loan amounts, and relatively low-interest rates. However, they can also be more difficult to qualify for and may require a lengthy approval process.

Line Of Credit

A business line of credit is a revolving credit option that allows you to borrow only what you need when you need it. This can be a good fit for managing cash flow or handling unexpected expenses. Interest is only paid on the amount you use, making it a cost-effective option for many businesses.

Equipment Finance

Equipment financing can be a great way to purchase necessary business machinery or equipment without tying up your working capital. This type of loan is self-secured, which means that the equipment itself usually serves as collateral. This can make it easier to qualify. Many equipment financing institutions require you to make a down payment.

Accounts Receivable Financing

Accounts receivable financing, also known as invoice financing, allows businesses to receive funds against outstanding invoices. This can be a good solution for businesses that often have to wait a long time to get paid by their customers.

MCA (Merchant Cash Advance)

A Merchant Cash Advance (MCA) is an advance on your future credit card sales. This could be a suitable option for businesses with a high volume of credit card transactions. However, it's essential to note that MCAs often come with higher interest rates compared to other types of loans.

Credit Cards

Business credit cards can be an easy way to manage everyday expenses and can also offer valuable rewards and perks. However, they typically come with higher interest rates than other types of loans, so they're best used for short-term financing needs.

Term Loan

These loans are a very popular choice for small businesses in Texas. A term loan is a traditional type of business loan where a lender provides a lump sum of money, which is then repaid over a set period of time with interest. This could be a good option if you're making a large one-time investment, such as buying property or equipment. Apply For A Business Loan!

Texas Small Business Grants

In addition to the varied lending options, there are also several grant programs that you can access. These are funding opportunities without the need for repayment. Although more competitive and stringent in their requirements, these grants can provide a significant boost to your business, so they're worth considering. Here are some of the main business grants you can access in Texas:
  • Texas Department of Agriculture grants
  • Texas Workforce Commission Skills for Small Business program
  • Texas Enterprise Fund grants
  • Texas Workforce Training Grants (TWC)
  • Alamo Small Business Grant Program

Ways To Use A Small Business Loan In Texas

The Dallas Fed says that 67% of loan applicants seek loans to expand their business or pursue a new opportunity. Here are some of the specific ways in which you can use small business loans in Texas:
  • Buying machinery and equipment.
  • Purchasing inventory.
  • Meeting payroll costs.
  • Paying for a new marketing campaign.
  • Launching a new product or service.
  • Opening at a new location.

Other Resources For Texan Businesses

Local Texas SCORE Chapter

SCORE is a nonprofit association dedicated to helping small businesses get off the ground, grow, and achieve their goals through education and mentorship. With local chapters across Texas, SCORE provides invaluable advice, workshops, and one-on-one mentoring for entrepreneurs and small businesses.

Local Texas Chamber Of Commerce

The local Chamber of Commerce is an excellent resource for small businesses. These organizations offer networking opportunities, training seminars, and a platform to voice your business concerns. They also provide useful information about local regulations, economic conditions, and business trends.

Local Texas Small Business Development Center

The Small Business Development Centers (SBDC) in Texas offer free business consulting and low-cost training services. Whether you need help with business planning, financial analysis, or marketing strategies, your local SBDC is a go-to resource.

The State Of Small Businesses In Texas

The Office of Advocacy of the U.S. Small Business Administration points out that there are 2.7 million small firms in Texas. They account for 99.8% of businesses. These companies employ 4.7 million workers. That's 45.1% of all the employees in Texas. It's a well-accepted fact that everything is bigger in Texas. This assertion is especially true when it comes to small businesses and their financing needs. However many of these businesses suffer from a lack of capital. A look at the April 2017 Texas Small Business Needs Assessment Poll reveals that just under 40% of business owners "experience some difficulty in receiving the requested amount of credit."

A Camino Financial Loan Is Right For Your Business

Camino Financial can be an excellent alternative for small businesses in Texas. We are a tech-driven online finance company that specializes in providing loans to companies in low-to-moderate-income communities. Our motto, "No business left behind", is our guiding principle.
If you require funds for your business, today is the perfect day to apply for a business loan.
At Camino Financial, we understand your needs and will suggest the most cost-effective loan for your company. Apply For A Business Loan!

FAQs

How can I borrow money instantly as a Texas business owner?

Online lenders and credit card issuers often provide near-instant access to funds. Additionally, some traditional banks offer quick approval times for business loans in Texas, especially for their existing customers.

Is a business loan considered income in Texas?

No, a business loan is not considered income in Texas or anywhere in the U.S. It's a debt that your business has the obligation to repay.

What credit score do you need for a small business loan?

The required credit score varies by lender and loan type. However, a score of 600 or above is typically preferred. Some lenders accept applicants with bad credit but they often have higher interest rates.

Can you borrow money to start a business?

Yes, there are startup business loans in Texas specifically designed to help entrepreneurs fund their new businesses.

Is it hard to get an SBA loan to buy a business?

SBA loans are competitive and have more stringent qualification requirements compared to other loan types. They require strong credit, a solid business plan, and, often, collateral.

What is the difference between an SBA loan and a business loan?

The main difference is that SBA loans are partially guaranteed by the U.S. Small Business Administration. This reduces the risk for lenders, potentially allowing for better terms and lower interest rates than conventional business loans.

How do small business loans work?

Small business loans provide a sum of money that businesses must repay over time, typically with interest. The specifics of the loan, depend on the type of loan and the lender. Some loans are specifically designed for purposes, while others are for a variety of business needs.

Are there any business loans for veterans in Texas?

Yes, you can apply with the following financial institutions:
  • Veterans Business Development Corporation (VBDC) loans
  • PeopleFund Veteran Entrepreneurs of Texas (PeopleVET) loans
  • Amegy Bank Veteran-Owned Business Loans

Are there any business loans for minorities in Texas?

The following institutions have programs that target minority-owned businesses.
  • The Texas Small Business Credit Initiative (TSBCI)
  • Small Business Administration (SBA)
  • Texas Department of Agriculture (TDA)
Their programs offer special terms and conditions designed to make it easier for minority-owned businesses to obtain financing.

Are there any business loans for women in Texas?

Yes, here are a few of the most popular options:
  • Women's Business Development Center (WBENC)
  • Capital Access Network (CAN)
  • Texas Women's Foundation (TWF)
  • The Athena Fund
 
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