Small Business Financing Opportunities in Texas

Texas business owners have rarely had it so good. For proof, we need only look at a few of the most recently published labor statistics. Unemployment is hitting record lows (3.5% – well below the national average), with the Lone Star State leading the nation in private-sector job creation (in excess of 350,000 last year). New business formation is at a five-year high, with start-ups enjoying the business-friendly tax environment as well as a bevy of local and state supported incentives for ambitious entrepreneurs. In 2018 the state’s annual GDP advanced to 1.7 trillion, giving Texas the 10^th largest economy in the world. 

All of these statistics tell the same story. Business is booming in Texas and there has rarely been a better time for small business owners looking to take their venture to the next level.

Financial Support for Small Businesses

One of the most significant drivers of Texas’ robust economy is the state’s ongoing and unflinching support for businesses of all sizes. While business owners in other areas of the country may have seen their financial opportunities diminish, Texans have experienced a definite uptick in available funding options. Start-ups, as well as long-established enterprises, are enjoying greater access to a wider variety of loans, grants, and private investors whose sole mission is helping them to succeed in an increasingly competitive marketplace. 

If you’re a Texan looking for funding to advance your business interests there are a number options to consider. Loans, grants and private investments are available to help take your venture to the next level. You just need to know where to look.

Small Business Loans in Texas

Small business loans are available from a variety of sources including regional and national banks, private lenders, and federal and state non-profits. These loans are designed to assist start-ups, as well as established enterprises, in funding their operations. Loan money can be used to rent or purchase commercial properties, expand or upgrade machinery, or support hiring and payroll expenditures. 

While the most obvious sources of small business loans are local banks and private lending institutions there are a couple of federal and state supported non-profits that can help small business owners secure the financing they need to establish or expand their operations.

The Small Business Administration

The United States’ Small Business Administration works to connect small business owners with reputable lenders who can supply the necessary funding for their ventures. The SBA does not underwrite loans themselves, but works with a national coalition of national lenders to help independent entrepreneurs secure low cost loans that can be used to start, or expand, a business enterprise. 

Loans obtained through the Small Business Administration typically have lower rates and better terms than those directly secured through a non-participating bank or private lender. Small business owners in Texas, and across the country, should make the SBA their first stop when searching for funding.

Business and Community Lenders of Texas

BLC of Texas is a non-profit dedicated to helping small businesses, both start-ups and established ventures, find the financing they need to succeed. They administer a variety of loan products including the Texas Small and Diverse Fund (loans ranging from $5000 to $50,000) and the Small Business Growth Fund ($50,000 to $300,000). BLC also offers more extensive funding (up to $5 million) for larger enterprises via the SBA 504 Loan Program. 

In addition to providing valuable financial support for small business owners, the BLC of Texas also offers free classes and seminars for interested parties as well as one-to-one coaching for first time entrepreneurs.

Grants for Small Business in Texas

Grants are an ideal source of funding for Texas business owners looking to expand their enterprise. Unlike traditional bank loans, grants do not need to be repaid. So the funding comes with minimal financial strings attached. However, qualifying for a small business grant can be difficult. The majority of small business grants in Texas are highly restrictive, and not every business will be suitable to apply for the award let alone receive the funding. That being said, if you are looking for an influx of cash, and are in the right industry, you may find you are eligible for one or more of these lucrative business-building grants.

The Texas Enterprise Fund

The Texas Enterprise Fund awards grants to Texas based businesses that are competing with out-of-state competitors for new projects with the Lone Star States’ borders. The grant is designed to provide the necessary funding small to medium sized businesses need to close the deal and win the project. 

Past awards have ranged from $200,000 to $50 million, as determined by the size of the project in question. To be in the running for the Texas Enterprise Fund grant businesses must prove that their project would benefit the state, binging a minimum of 75 guaranteed jobs to their community.

CAPCO

A Certified Capital Company (CAPCO) is a private government sponsored venture capital firm dedicated to increasing business opportunities in Texas. The company provides growth capital for small to medium sized businesses operating within the state. One of the main focuses of CAPCO’s grant program is to stimulate job creation n Texas. To that end, any business applying for funding must guarantee that no less than 80% of its workforce and payroll will be located in Texas. 

To be eligible for funding businesses must be located within the state of Texas, or have plans to relocate their headquarters to Texas with 90 days of the first dispersal of funds. The business must also prove that they have no more than 100 employees on payroll at the time of application. Eligible applicants must be involved in specific lines of business, most particularly manufacturing, assembly, or product research and development.

The Texas Workforce Commission

The Texas Workforce Commission is designed to promote business and employment opportunities in the Lone Star State. The TWC administers a variety of grants for small Texas-based businesses. The two grants of greatest interest to small business owners are the Skills Development Fund and the Skills for Small Business Grant. 

• Skills Development Fund – This grant provides the necessary funds to pay for the training of employees and employers throughout the state. The purpose of the grant is to improve the skills of the Texas workforce, while developing new and more effective on-the-job training programs.
  Skills Development Fund grants are capped at $500,000 per business.
• Skills for Small Business Grant – This grant is designed to provide the necessary funding for the training of new hires in businesses with fewer than 100 employees. Grants cover the tuition and fees of new hires, up to $1800 per employee.

The Amber Grant

Administered by WomensNet, the Amber Grant is designed to provide the funding female entrepreneurs need to start, or expand, their small Texas-based businesses. A $1000 grant is awarded monthly to qualifying applicants who will then have a chance at winning an annual year-end $9000 grant. The application process is relatively simple, however there are strict deadlines for each monthly award that must be met in order to qualify for a chance at the Amber Grant award.

The National Association for the Self-Employed

The National Association for the Self-Employed (NASE) is a national organization that provides small grants of working capital to qualifying self-employed business owners throughout the country. The modest grants are designed to help cover the costs of product development, advertising, and equipment upgrades. 

Applicants must be NASE members in good standing. Award amounts are capped at $4000, and grants are issued in January, April, July, and October.

Texas-Based Small Business Investors

In some cases finding a small business investor can be the ideal solution to a start-up’s financial shortfalls. In addition to the much-needed funding, you gain access to the advice and counsel of successful and established business people in your community. That can be invaluable for first-time entrepreneurs launching a new enterprise. 

However, it is important to remember that when you take on an investor you are agreeing to give them partial ownership of your business. That does have the potential to cause problems down the road, especially if you and your investor begin to disagree on how the business should be run. When it comes to private investors, proceed with caution and make sure that any legal agreements are carefully written in your favor. 

Small business owners in Texas looking for investors would do well to investigate the following associations.

The Texas Investment Network

The Texas Investment Network has a long history of connecting investors seeking investment opportunities with entrepreneurs seeking capital. While the network works with businesses in all sectors, there are strict eligibility requirements that must be met by both investors and applicants. There is a one-time fee of $149 to become part of the network, after which small business owners will have access to a pool of potential investors.

The Cowtown Angels Network

Cowtown Angels is a Fort Worth-based investment network that offers funding opportunities, as well as instruction and mentorships, for first-time business owners in Texas. Cowtown Angels focuses on entrepreneurs in the early stages of business development, and the organizations 50+ accredited investors can advise and provide funding for eligible applicants in a wide variety of business sectors.

Finding the Right Funding for Your Business

As you can see, small business owners in Texas have access to a wide variety of funding opportunities. The right loan or grant can go a long way to securing a bright future for you and your business, or timely investor might help take your start-up to unexpected heights of success. 

A word of caution, however, is in order. All financial products (loans, grants or investments) have potential pitfalls. Loans must be repaid in a timely manner – and with interest. Private investors will assume partial ownership and control of your business – and you will no longer be in total control of your venture. Even grants, a promise of free capital, are not entirely devoid of strict guidelines and regulations. 

Before you apply for any funding, regardless of the source, make sure you fully understand the pros and cons of your decision. It’s true that the right funding can take your enterprise from shaky start-up to unmitigated success. But the converse is equally true. The wrong funding source can put an unexpected strain on you and your business, leading to trouble down the line. Proceed with caution, and always solicit professional advice before signing any financial contracts.