Best Small Business Loans in Texas
Small business loans in Texas can help local companies access funds up to $10 million for inventory, payroll, equipment, commercial real estate and more.
| Lender | Best for | Starting rate | Amount | Term | Time in business |
|---|---|---|---|---|---|
|
Fast funding | 7.00% | Up to $25k | Up to 84 months | Not specified |
|
Startups | Not specified |
$20k – $50k |
Not specified | BCL of Texas offers funds to new businesses |
|
Established businesses | 8.75% |
$25k – $5M |
Up to 120 months | 24 months |
|
Microloans | Not specified | Up to $35k | 12 – 72 months | 3 months; 12 months for loans over $15,000 |
|
Commercial loans | 8.20% |
$100k – $10M |
Up to 180 months | Not specified |
|
Online term loans | 13.00% |
$5k – $1.5M |
Up to 24 months | 6 months |
|
SBA loans | 9.75% | Up to $5M | Up to 300 months | 24 months |
|
Veteran borrowers | 6.50% | Not specified | 12 – 60 months | 24 months |
|
Flexible qualifying requirements | 0.00% |
$500 – $1M |
5 – 180 months | Not specified |
State-wide loan options for Texas small businesses
Here are some business lenders that operate throughout the entire Lone Star State.
Best for: Fast funding – PeopleFund
- Starting rate
- 7.00%
- Get the funds you need in a flash
- Offers free business advising
- Interest rate discounts for veterans
- Limited physical branches
- Small loan amount for Flash Funds
- Doesn’t specify funding time
PeopleFund, a Community Development Financial Institution (CDFI) in Texas, offers quick business loans of up to $25,000 to new and established businesses. The organization’s mission is to provide economic opportunity for underserved communities in the state by providing a mix of resources, education and access to capital.
In addition to Flash Funds, you can apply for SBA 504 loans to finance real estate and large equipment purchases and SBA Microloans for smaller expenses. Although PeopleFund has branches throughout Texas, the fastest way to apply is by using its streamlined online application.
Learn more about PeopleFund.
In order to qualify, you’ll need to meet PeopleFund’s criteria of:
- Minimum credit score: 600
- Minimum time in business: There’s no minimum disclosed, though the website does make it clear that they work with both established businesses and companies less than 24 months old
- Minimum annual revenue: Not specified
Best for: Startups – BCL
- Starting rate
- Not specified
- Works with businesses that have been operating for less than two years
- Free business coaching services included for the life of the loan
- Flexible use of funds, including working capital, equipment, lines of credit and more
- Must contact the lender for specific information about rates, terms and potential fees
- Only small loans amounts available for startups
Business and Community Lenders of Texas (BCL) of Texas is another CDFI lender, offering startup business loans of up to $50,000 for Texas-based companies with less than a two-year business history. As an added bonus, you’ll also gain access to free business coaching services for the entirety of the time you borrow from BCL.
If BCL’s startup business loans aren’t right for your company, other financing options include:
- Small & Diverse Growth Fund: Offering minority and women-owned businesses loans up to $50,000.
- Rural Business Lending: Providing loans up to $250,000 for businesses in communities with populations of 50,000 people or fewer
- SBA 504 loans: Used by businesses who may not otherwise qualify for a loan to purchase real estate or equipment.
- Business Growth Fund: Offers established businesses access to loans ranging from $50,000 to $300,000
Learn more about Business and Community Lenders of Texas.
In order to qualify, you’ll need to meet BCL of Texas’s criteria of:
- Minimum credit score: Not specified
- Minimum time in business: BCL of Texas offers funds to new businesses
- Minimum annual revenue: Not specified
Best for: Established businesses – Lendistry
- Starting rate
- 8.75%
Based on the current prime rate of 6.75% + 2% – 6% added by Lendistry
- Higher loan amounts available
- Competitive interest rates
- Longer repayment windows
- Longer time in business requirement
- Higher credit score requirement
- Doesn’t list estimated approval and funding times
Lendistry partners with Texas Capital Bank to offer financing of up to $5,000,000 to businesses in Texas that have at least a two-year operating history. However, if you can meet that benchmark, its loans come with long repayment windows and reasonable interest rates. Plus, the funds can be used for anything from increasing working capital to refinancing business debt or expanding your company.
Since Texas Capital Bank is a traditional lender, you’ll likely face stricter qualifying requirements than you would with an online lender. Alternatively, you can explore Lendistry’s business grants to see if there are any options for your Texas-based business.
Learn more about Lendistry and Texas Capital Bank.
In order to qualify, you’ll need to meet Lendistry’s criteria of:
- Minimum credit score: 640
- Minimum time in business: 24 months
- Minimum annual revenue: Not specified
Local small business loans in Texas
Some lenders focus on serving Texas businesses in specific metro areas. Here are some small business lenders who may be local to your area:
Best for: Microloans – BiGAustin
- Starting rate
- Not specified
- Short time-in-business requirement
- Offers various business training programs and workshops
- Long repayment periods for loan size
- Lack of transparency about interest rates, fees and credit score requirements
- All business loans require collateral
- Longer funding times compared to online lenders
Business Investment Growth Austin (BiGAUSTIN) offers microloans to growing businesses in Austin, Texas, and its surrounding counties. Startups with at least a three-month business history can qualify for up to $15,000 in funds, while more established businesses with at least a year in business can borrow a total of $35,000.
While loan approval can take two to four weeks, which is longer than you’ll find with many lenders, this organization may be a good choice for business owners who are looking to take advantage of supplemental services. BiGAUSTIN offers a range of entrepreneurship programs and workshops, helping emerging businesses in Texas grow and expand their ideas.
Learn more about BiGAustin.
In order to qualify, you’ll need to meet BiGAustin’s criteria of:
- Minimum credit score: Not specified
- Minimum time in business: 3 months; 12 months for loans over $15,000
- Minimum annual revenue: Not specified
Best for: Commercial loans – LISC Houston
- Starting rate
- 8.20%
- Low interest rate compared to other commercial loans
- High maximum loan amount
- Also offers grants and educational resources
- Not suitable for startups
- Loans secured by collateral and require a down payment
- Charges a 1.50% loan fee
If you’re interested in taking out a commercial loan to purchase or develop real estate, consider LISC Houston. In particular, this CDFI’s permanent loan extends to $10,000,000 with a 180 months repayment window and an affordable 8.20% interest rate. Plus, LISC Houston also offers grants and educational resources for its borrowers.
Still, this program’s eligibility criteria indicates that it’s not suitable for startups. Plus, it charges a 1.50% loan fee, which may get pricey, especially at higher loan balances.
Learn more about LISC Houston.
Nationwide small business loans for Texas
If none of the above small business lenders in Texas suit your needs, consider a nationwide option instead. Here are some of our top picks:
Best for: Online term loans – Fora Financial
- Starting rate
- 13.00%
Fora Financial’s minimum rate is a 1.13 factor rate. This means you’d repay 13.00%, plus any additional fees, on top of the amount borrowed.
- Lower credit scores accepted
- Ability to receive funding in as little as 24 hours after approval
- Early payoff discount available
- Doesn’t report to all credit bureaus
- May require a UCC lien
- High interest rate range (Up to 40.00% )Fora Financial’s minimum rate is a 1.13 factor rate. This means you’d repay 13.00%, plus any additional fees, on top of the amount borrowed.
Fora Financial is an online lender offering competitive business term loans and revenue advances. The biggest benefit of Fora Financial is its high borrowing limit of $1,500,000 and lower credit score requirement of 570, plus its quick funding times — with funds hitting your business bank account in as little as 24 hours after approval.
However, Fora Financial has a higher-than-usual annual revenue requirement of $240,000. What’s more, even if you’re approved for the loan, you may face a high interest rate depending on your credit score and business history.
Read our full Fora Financial review.
In order to qualify, you’ll need to meet Fora Financial’s criteria of:
- Minimum credit score: 570
- Minimum time in business: 6 months
- Minimum annual revenue: $240,000
Best for: SBA loans – Huntington National Bank
- Starting rate
- 9.75%
Some borrowers may qualify for lower rates. Based on the current prime rate of 6.75% + a rate maximum set by the SBA. Maximum rates for variable-rate SBA 7(a) loans are: 13.25% for loans $50,000 or less; 12.75% for loans $50,001 to $250,000; 11.25% for loans $250,001 to $350,000; 9.75% for loans above $350,000
- Longer loan terms can increase cash flow
- Provides a dedicated team of SBA loan specialists
- Offers multiple SBA loan options
- Collateral and/or down payment could be required
- Must operate a for-profit business in the U.S.
- Doesn’t disclose its interest rates or qualifying criteria
Huntington National Bank advertises itself as the leading SBA lender in the nation. The bank’s SBA loan options include the SBA 7(a) Loans, SBA Express loans and SBA 504 loans.
If you choose to participate in Huntington’s SBA loan program, you get access to longer terms, no balloon payments and down payments as low as 10%. What’s more, since it’s an SBA-preferred lender, the bank can help you receive funding faster than other financial institutions.
Learn more about Huntington National Bank.
Huntington National Bank doesn’t give much information on its qualification criteria. The recommended criteria for SBA loans in general is typically:
- Minimum credit score: 650 (recommended)
- Minimum time in business: 24 months (recommended)
- Minimum annual revenue: Not specified
Best for: Veteran borrowers – Bank of America
- Starting rate
- 6.50%
- Transparent about its qualifying criteria
- Offers a range of small business solutions
- Interest rate discounts for Preferred Rewards for Business members and veteran-owned businesses
- Doesn’t list maximum loan amount
- Doesn’t list maximum rate ranges
- Charges a $150 origination fee
If you prefer to borrow from a traditional bank with in-person support, Bank of America could be a good option. In particular, its unsecured business loan is our pick for veteran borrowers because it offers an interest rate discount for them, as well as existing Bank of America Preferred Rewards members. We especially like this loan because of the bank’s straightforward, transparent information on how to qualify.
At the same time, though, BofA doesn’t list its maximum loan amount, which makes it difficult to understand how much you can borrow. The bank also charges a $150 origination fee, which is smaller than some other lenders charge.
Read our full Bank of America review.
In order to qualify, you’ll need to meet Bank of America‘s criteria of:
- Minimum credit score: 700
- Minimum time in business: 24 months
- Minimum annual revenue: $100,000
Best for: Flexible qualifying requirements – LiftFund
- Starting rate
- 0.00%
- Provides business networking opportunities and entrepreneurship programs
- Helps build business credit
- Offers customer support in Spanish
- Potential for higher interest rates (Up to 18.00%)
- Higher loan amounts may need to be secured by real estate
- Doesn’t fund all industries
LiftFund is a CDFI lender that works to support entrepreneurs nationwide who have limited access to capital. With a strong focus on startups, LiftFund is unique because it boasts flexible credit score, time in business and annual revenue requirements. However, in addition, this lender provides low-cost funds for inventory, payroll, equipment, vehicles, commercial real estate and more. Business owners in San Antonio can also inquire about the Zero Percent Interest Loan Program.
Still, ranging up to 18.00%, the interest rate on LiftFund’s loans can be quite steep for some borrowers. Plus, if you want to borrow up to the $1,000,000 loan limit, you may have to use your own real estate as collateral.
Learn more about LiftFund.
In order to qualify, you’ll need to meet LiftFund’s criteria of:
- Minimum credit score: None, but recent changes to your score or bankruptcies may affect your likelihood of qualifying
- Minimum time in business: None
- Minimum annual revenue: None, but the applicant must prove that they have the ability to repay the debt
What to know about small business lending in Texas
Texas is one of the nation’s largest states, with 3.3 million small businesses calling it home. Small businesses account for over 99% of businesses of all sizes in the state.
Luckily, the Lone Star State offers plenty of resources and funding to help those small businesses succeed. Here’s what you need to know about small business loans in Texas.
Types of business loans in Texas
Backed by the U.S. Small Business Administration (SBA), SBA loans help small business owners who don’t qualify for traditional financing get the capital they need to grow and expand their businesses. The SBA 7(a) loan is ideal for day-to-day expenses, while the SBA 504/CDC loan can fund more significant projects, like expansions or heavy equipment.
Business term loans provide a lump sum of cash at once, allowing you to tackle short- or long-term business needs. Repayment terms for short-term business loans are typically two to 24 months with daily or weekly payments. If you need access to more funds with extended repayment terms, a long-term business loan with terms up to 25 years might be more suitable.
A business line of credit is similar to a business credit card, letting you borrow up to your credit limit as often as needed. Funds can be used for a range of purposes, such as inventory, payroll, utilities or covering seasonal dips in revenue. You only pay interest on what you withdraw, although some lenders charge additional maintenance fees.
Equipment financing and equipment leasing can help companies acquire, repair or upgrade equipment and machinery needed to keep their business running smoothly. Equipment loans typically have less strict eligibility requirements since the loan is secured by the equipment. Low-credit borrowers can also consider equipment loans for bad credit.
Other funding options for your small business in Texas
Now that you have a better idea of where to find funding, it’s time to look at some other resources for small businesses in Texas. While this is not an exhaustive list of all the help that’s available for your business, it should be enough to get you started.
Texas Governor’s Office of Small Business Assistance
Texas has a wide variety of resources for small business owners. While banks and nonprofit lenders can provide financing, the Texas Governor’s Office of Small Business Assistance offers support for small businesses, including education on how to start a small business in Texas, help with getting permits and licenses, assistance with regulatory compliance and webinars and in-person summits.
Grants
State and local organizations and nonprofits offer small business grants in Texas to help your small business succeed. Although competition can be fierce, it’s worth applying to get free funds for your business. Here are a few Texas small business grants worth checking out:
-
The Center for Women Entrepreneurs StartHER Grant
StartHer Grants offers a $5,000 grant to majority-women-owned businesses in Texas with five or fewer employees. -
Texas Workforce Commission (TWC) Skills For Small Businesses Grant
The Texas Workforce Commission provides grants to help cover the cost of training full-time employees at a local community college or technical school. They’ll provide $2,000 for each new hire and $1,000 to train employees who have been at the company for more than a year. -
Texas Enterprise Fund
The Texas Enterprise Fund (TEF) offers grants to businesses that are looking to expand, provided that they create new full-time jobs in the process. Although there are other eligibility requirements, it’s important to note that eligible businesses must create at least 75 new jobs in urban areas or 25 new jobs in rural ones.
Coaching and mentorship
Tapping into coaching and mentorship programs can often make a big difference for small business owners. While a few of the lenders on this list also offer business coaching in addition to funding, here are a few more resources to check out if you’re looking for personalized guidance:
-
SCORE
SCORE is a national organization with a mission to strengthen small businesses with coaching and mentoring. They have branches throughout multiple cities in the Lone Star State, including Austin, Houston, Dallas, San Antonio and Fort Worth. -
Economic Growth Business Incubator (EGBI)
Residents of Austin and Central Texas may benefit from the area’s Economic Growth Business Incubator. The organization’s mission is to provide training, coaching and support to small business owners who may otherwise face barriers to their success. -
AVANCE Child Care Business Coaching
Headquartered in San Antonio with affiliate chapters around the state, AVANCE offers free coaching for child care businesses and professional development.
Small business development centers
In addition to providing SBA loans in Texas, the U.S. Small Business Administration also operates small business development centers (SBDCs) across the country. These centers are designed to give small business owners the counseling, training and tools that they need to succeed.
You can find your closest SBDC by visiting the link above and putting your five-digit zip code into the locator tool at the bottom of the page.
Texas business loan requirements
Once you have a better idea of where to find funding options for Texas small businesses, it’s a good idea to start thinking about how to pull your loan application together. While each lender has its own specific business loan requirements, here’s a general overview of what you’ll likely need to provide.
Credit score
Two of the most impactful factors that lenders will consider during the loan application process are your personal FICO Score and business credit score. As a rule of thumb, the higher these scores are, the more likely you are to be approved and the better the interest rate you’re likely to receive.
Reporting for both scores is based on a number of factors, but in either case, payment history and debt usage play a big role.
Business plan
Your business plan will provide the lender with an overview of your business model.
You should be sure to include details on how the loan funds will be used, specifics on your company’s current financial standing and your plan for how you intend to generate enough revenue to comfortably pay back the loan.
Annual revenue
Annual revenue refers to the amount of money your business has made over the past year — before taxes. Most small business lenders will list their minimum annual revenue under their eligibility requirements, which can range $36,000 to $480,000 or higher, with some lenders accepting lower earnings for startups.
Time in business
Since not all small businesses succeed, it’s generally considered riskier to lend to younger businesses. As a result, many traditional financial institutions impose a two-year time in business requirement for lending purposes.
Don’t worry, though — if your business is newer, it’s still possible to find funding. You’ll just need to concentrate on finding a lender that specifically offers startup business loans.
Collateral and/or personal guarantee
Depending on your lender or type of loan, you may be asked to secure the loan with collateral or sign a personal guarantee. Providing these often makes it easier to be approved for the loan.
However, in exchange, you could face some fairly steep consequences if you default. Offering collateral gives the lender the right to repossess your asset in the event that you are unable to keep up with your payments. Meanwhile, a personal guarantee means that you’ll personally be on the hook for repaying the loan if your business is ever unable to continue footing the bill.
How to apply for a small business loan in Texas
Follow these steps to get a small business loan in Texas:
Step 1: Decide what type of business loan you need
Research the different types of small business loans to find the best option that fits your business needs. For example, if you want flexible funding that covers a range of expenses, consider a working capital loan. Note that some lenders impose limitations or restrictions on industries they fund, as well as how funds are spent.
Step 2: Determine your eligibility
Review the lender’s criteria regarding credit score, time in business, annual revenue and more to ensure it’s a good match for your situation. Boosting your business credit profile before applying for a small business loan can help increase the chances of securing the best rates and terms.
Step 3: Compare small business lenders
Not all lenders are created equal. Spend some time reading small business lender reviews and scouring the lender’s website for any red flags. Watch out for no-credit-check business loans or any offer that sounds too good to be true.
Step 4: Gather required documents
Lenders often ask for additional supporting documentation with your loan application. While there is no hard-and-fast rule as to what’s required, some commonly requested supporting documents are:
- Business tax ID number
- Business tax returns
- Business financial statements, such as balance sheets and income statements
- Personal financial statements for any business partners
- Recent copies of any applicable bank statements
- Information on any assets being used as collateral
- Governing documents, such as articles of incorporation or bylaws
- Business licensing and permit information
- Certificate of good standing
Step 5: Submit and review offers
You can generally submit a small business loan application online, often receiving a response quickly. However, some traditional banks and credit unions may require an in-person appointment. Read the fine print before signing to ensure you understand all the details, including additional fees.
How to compare Texas business loans
When comparing small business lenders in Texas, it’s important to consider the overall cost of the loan and whether you can keep up with payments. Here’s a closer look at the different factors that you should consider during your search.
-
Interest rates
Business loan interest rates can vary by lender and loan product. While variable APRs with a low intro rate can seem enticing, it’s generally better to go with a fixed APR so your payments don’t change. That stability can make it easier to stick to your business budget. -
Loan term
Loans with longer terms usually come with lower monthly payments, but in exchange you’ll pay more in interest charges over time. In contrast, loans with shorter terms have higher monthly payments, but you’ll pay less in interest overall. -
Extra fees
Some lenders charge an origination fee to cover the administrative costs of generating a new loan while others charge prepayment penalties or late payment fees. Make sure to add these to the overall cost to help you find the best option for your wallet. -
Funding time
If you need funds fast, you may want to prioritize alternative lenders offering quick business loans. However, if you can afford to wait several weeks or months, SBA loans and traditional banks might be a good option, as they usually offer better rates and more flexible repayment terms. -
Overall transparency
Consider the overall transparency of the lender regarding the loan’s repayment terms. Don’t be afraid to reach out to the lender for more clarification if you have any questions.
Our methodology: How we chose the best small business loans in Texas
We reviewed the leading local and nationwide lenders to determine the best small business loans in Texas. To make our list, lenders must meet the following criteria:
- Geographic location served: We look for lenders who specialize in offering funding to small business owners in the state of Texas.
- Rates and terms: We prioritize lenders with a range of loan amounts, competitive rates, limited fees, flexible repayment terms and APR discounts.
- Repayment experience: We consider each lender’s reputation and overall business practices. We favor lenders that report to all major credit bureaus, offer reliable customer service and provide extra support to customers, like free business coaching or business rewards programs.