Small Business Loans in Texas

Small Business Loans in Texas

Small Business Loans in Texas

Did you know there are 2.8 million small businesses in Texas? Or that those small businesses employ 4.8 million people? Texas is a fantastic place to start or grow a business, whether you’re in Austin, Dallas, Houston, or one of the hundreds of other cities in the Lone Star State…but not without a little help. Here’s what you need to know about small business loans in Texas.

How a Loan Can Help your Texas Small Business

When I say “help,” I’m referring to small business loans, which can be useful in a variety of ways. They can help you purchase what your business needs to run day-to-day, and ensure you have enough cash flow to make it through slow periods in your business.

Taking out a business loan can also help you build and grow your business credit, as long as you pay your monthly installment on time each month.

Business Loan Options for Texas Small Businesses

You have several options when it comes to business financing. Some you may qualify for, especially if you have great credit, while others may offer you financing at higher rates.

COVID-19 Pandemic Loans

In addition to two federal loan programs, the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program, there have been several COVID-19 small business grant and loan programs available in Texas, including loans from PeopleFund and various city governments. Check links for the most recent information.

Bank Loans

If your credit is excellent, you may qualify for a long-term loan with loan interest rates from a bank or credit union.

SBA Loans

The U.S. Small Business Administration also offers low-interest loans like the 7(a) loan or SBA 504 loans, which may be used for things like business expenses, equipment, and commercial real estate. Learn more at

Lines of Credit

If you need access to capital but don’t want it all at once (nor to have to start paying it all back at once), business lines of credit may fit the bill. Borrow from what you’ve been approved for and pay back just that amount.

Equipment Financing

If you use equipment like computers, heavy machinery, or even company trucks, there are specific equipment loans you may want to explore. The equipment you’re buying acts as your collateral, which may lower interest rates.

Credit Cards

Having business credit cards to make purchases for your company can be useful, even if you don’t have cash in the bank. Pay off your balance in full to avoid interest charges, and look for a card with rewards you can earn for your purchases.

Short-Term Loan

But what if you don’t qualify for any of the above options, maybe because your business is new or because you don’t have good credit? You may still qualify for short-term loans, though know that they tend to have higher interest rates.

How to Choose the Right Loan for Your Texas Business

Start with your eligibility. Which financing options do you qualify for? Ideally, you would apply for the loan with the lowest interest so you minimize the extra fees you pay.

Also, consider how you plan to use the funds. Some loans, especially SBA loans, may have specific requirements for how you can use loan proceeds, and there are loans like equipment financing that are for certain purchases.

How to Qualify for a Business Loan in Texas

Financial institutions may have slightly different criteria for how to qualify for a business loan, but generally, you can expect them to look at how long you’ve been in business, your credit scores, and your annual revenue.

New businesses may have difficulty qualifying for bank or SBA loans since they tend to approve applications from companies in business for two or more years. A better option for a startup may be a business credit card or short-term loan.

The higher your credit scores, both personal and business, the better the offers you’ll qualify for. More on credit scores in the next section.

What is a Good Credit Score to get a Texas Business Loan?

Each lender has its own criteria for required credit scores for small business financing. The SBA, however, does not have a published minimum credit score requirement, but many lenders will require a personal credit score of at least 640.

Some lenders may also look to see if you have business credit scores, which not all businesses do. If you don’t have them, learn how to establish business credit to expand your options.

And remember: even if you have bad credit, there are lending options for you, albeit at a higher cost.

How to Get a Small Business Loan in Texas

Lenders may vary in their application process, but expect to be asked details about your business, how long it’s been in operation, your annual revenues, et cetera. And because you may be personally guaranteeing the loan, you may need to provide personal details like your Social Security number.

Once you’ve been approved for a loan, review the loan terms, which will detail the loan amount, interest rate, and repayment schedule. Sign the agreement, and funds should be deposited into your business checking account in as little as one business day.

Ways to Use a Small Business Loan in Texas

Business funding uses are as varied as the small business owners who apply for financing.

If you have slow periods in your business, you may simply want access to working capital so your bank account never runs dry. If you’re looking to expand, you might use a loan to purchase commercial real estate and renovate new retail space. You could use the funds to purchase larger inventory orders so you can save on a per-unit basis.

An equipment loan could be used to buy updated equipment that helps you serve more customers or speed up your production line. You could use the funds to hire more help to take some of the load off of yourself.

A small business loan for your Texas company can and should help you elevate your business to new levels!

This article was originally written on July 8, 2021.

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Susan Guillory

Susan Guillory is a Senior Content Writer for Nav. She’s written books on business and travel, and blogs about small business on sites including Forbes and AllBusiness.

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