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Small Business Loan Options in the State of Texas

June 4, 2021 | Last Updated on: January 12, 2024

By Rachel C

DISCLAIMER: This article was written in 2021and has not been updated. For more up to date information about small business funding products and options, please browse our recent articles.

As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.

The great state of Texas is a great place to run a small business. In 2020, Texas was named the best state in the country for doing business for the eighth consecutive time. The state is known for having a positive overall business climate and a highly favorable tax climate. It is a state also known for being home to a great amount of talent that businesses need to be successful. Texas is exceptionally welcoming to new and small businesses, particularly those that are looking to grow quickly and create jobs. It is consistently ranked as one of the top states to start a business. In fact, there are a tremendous number of small businesses in Texas: Small Business Association stats show that small businesses make up 99.8% of all businesses in Texas!

If you are a small business owner in Texas or thinking about moving your business to Texas, you may be curious about financial support such as grants, loans, credits, and exemptions that are available in the Lone Star State. The good news is that there are many forms of financial support for businesses in Texas – including some legacy programs and others that are new as of the coronavirus pandemic. This article summarizes many types of financial support for small businesses in the state of Texas, including small business loans, that may be just what your business needs.

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Funding Your Small Business in Texas

Businesses in Texas are eligible for federal loans and grants. For instance, businesses in Texas may be eligible to apply to business financing programs created due to COVID including Paycheck Protection Program (PPP) loans, EIDL loans, Shuttered Venue Operator Grants for live venues, museums, and theatres, and starting in early April 2021, the Restaurant Revitalization Fund. Many local cities in Texas including Dallas and Fort Worth launched special COVID relief funds that are now closed but small business owners should keep an eye on these cities’ websites in case additional funding opportunities reopen. Small businesses in Texas are also eligible for U.S. Small Business Administration loans (SBA loans), Disaster Loans, and Rural Business Loans. More info on these loans can be found at SBA.gov. Businesses in Texas can, of course, also turn to conventional forms of funding including business credit cards and loans from banks or online lenders.

There are Several Texas-Specific Funding Opportunities Your Small Business Should Be Aware Of

The Texas Product Development and Small Business Incubator Fund (PDSBI) provides loans to small business incubators/accelerators and product development companies in Texas. The loans must “finance the development and production of new or improved products.” The loan amounts typically range from $1M – $5M and do require collateral.

The Texas Workforce Commission (TWC) offers a grant called the Skills for Small Business Grant which provides funding to businesses who want to provide training to new or existing workers. Eligibility is limited to those with <100 employees.

The state of Texas also has a special partnership with three nonprofit lenders who offer business funding and lines of credit with “favorable terms, such as low interest rates, as well as advice, mentoring, and workshops. These nonprofit organizations focus on lending to disadvantaged businesses and entrepreneurs.” Indeed, some of these financial institutions also offer loan programs and financing options with low down payments, flexible underwriting, and no pre-payment penalties for early repayment. Three lenders cited on the Texas Small business website as offering these benefits are BCL of Texas, LiftFund, and PeopleFund. For instance, BCL profiles Austin-based Tamale Addiction, which received loans from the BCL Business Growth Fund and used the funds to “purchase products, develop a strong marketing campaign, and grow their presence in the market.” The PeopleFund has “lent over $130,000,000 to more than 3,000 unique small businesses and nonprofits that have created or retained over 11,000 jobs across Texas.”

Finally, one niche Texas grant is StartHER which provides $5,000 grants for women-owned businesses in Texas.

Texas Financial Resources for Small Businesses Aren’t Just Limited to Loans

Texas is home to many investors who seek out small businesses to invest in. The Alliance of Texas Angel Networks site details the networks of angel investors across the state. According to their website, “In the last 10 years, ATAN members have invested over $200,000,000 in hundreds of startups.”

If you are looking to strengthen your small business’ talent, check out the Texas Skills Development Fund which subsidizes customized training opportunities for business employees via local community and technical colleges.

Finally, SCORE is another resource that small business owners should be aware of in Texas. This nonprofit offers “1-on-1 mentoring sessions, networking opportunities, webinars, training workshops for small business owners.

For those in Houston, recently announced program a recently announced program will provide grants of up to $10,000 to minority-owned small businesses in Houston. The Representation, Investing, Strength, and Empowerment (RISE) program is part of a larger grant program from Comcast.

Texas is Also Serious About Attracting Businesses to the State and Offers Valuable Tax Incentives that Can Strengthen Your Cash Flow

Texas has no corporate or personal income tax, which makes it one of the lowest tax states for businesses. There are also sales tax exemptions for certain types of machinery, R&D materials, software, and equipment. Companies considering relocating to Texas can seek out property tax abatements and fee waivers. The Governor of Texas also recently reduced the state’s franchise tax and there is a franchise tax exemption for companies looking to relocate to Texas.

If you are considering relocating your small business to Texas, you should also be aware of Texas Enterprise Fund which provides “grants to companies considering a new project for which one Texas site is competing with other out-of-state sites.” One requirement is that the business must create 75 full-time jobs (if urban) or 25 full-time jobs (if rural).