Access to capital can make the difference between delaying a business goal and moving it forward. A startup may need money for equipment, inventory, or initial operating costs. An established company may need funding to hire employees, expand its facility, purchase another business, or manage seasonal cash flow.
Fortunately, there are several small business funding options in Texas. These include conventional bank loans, lines of credit, U.S. Small Business Administration-backed loans, nonprofit lenders, state-supported financing programs, workforce training grants, and private investment.
The best option depends on how much money the business needs, how the funds will be used, how quickly they are needed, and whether the owner is prepared to take on debt or give up part of the company.
Start With a Clear Funding Purpose
Before contacting a lender or searching for grants, identify exactly what the money will accomplish. A lender will want more than a general statement that the business needs capital. The request should explain:
- How much funding is needed
- What the money will be used for
- When the funds are needed
- How the investment will benefit the business
- How the business expects to repay the money
Different funding sources are designed for different purposes.
| Business need | Funding options to consider |
| Short-term cash flow | Business line of credit |
| General business expansion | Bank term loan or SBA 7(a) loan |
| Commercial property or major equipment | SBA 504 loan |
| Smaller startup or expansion expenses | SBA microloan |
| Limited access to conventional financing | CDFI or TSBCI-supported loan |
| Employee education and training | Texas workforce training grant |
| Research, exporting, or specialized projects | Targeted grant programs |
| Rapid growth without monthly loan payments | Private investors or equity financing |
Understanding the purpose of the money helps narrow the search and prevents a business from taking on financing that does not fit its needs.
Traditional Bank Loans and Lines of Credit
Banks and credit unions remain common sources of small business funding in Texas. Depending on the institution, businesses may be able to apply for term loans, commercial real estate loans, equipment financing, or revolving lines of credit.
A term loan provides a set amount of money that is repaid over an agreed period. It may be appropriate for a one-time expense, such as buying equipment, completing a renovation, or opening another location.
A business line of credit allows the company to borrow as needed, up to an approved limit. It may be better suited for recurring or short-term expenses, such as covering payroll during a slow season, purchasing inventory, or managing the timing between customer invoices and operating expenses.
Traditional financing is often a strong option for businesses with established revenue, organized financial records, reliable cash flow, and a good credit history. However, rates, collateral requirements, repayment periods, and approval standards vary by lender.
Business owners should compare the total cost of financing rather than focusing only on the monthly payment. Interest rates, origination fees, closing costs, prepayment penalties, collateral requirements, and personal guarantees can all affect the final cost.
SBA 7(a) Loans
The SBA 7(a) Loan Program is the SBA’s primary business loan program. The SBA does not usually lend the money directly. Instead, participating banks and other lenders provide the financing, while the SBA guarantees a portion of the loan and reduces some of the lender’s risk.
SBA 7(a) loans may be used for:
- Short-term or long-term working capital
- Machinery and equipment
- Furniture, fixtures, and supplies
- Commercial real estate
- Refinancing eligible business debt
- Purchasing an existing business
- Complete or partial changes in ownership
- Multiple business purposes within one loan
The maximum 7(a) loan amount is $5 million, although the amount available to an individual business depends on the lender, the borrower’s qualifications, the use of funds, and the business’s ability to repay the debt. (Small Business Administration)
A 7(a) loan can be a flexible choice because it covers a wide range of business needs. However, an SBA guarantee does not eliminate the lender’s underwriting process. Applicants must still demonstrate that the business is eligible and capable of repaying the loan.
SBA 504 Loans
Businesses planning to purchase commercial real estate or major equipment may want to explore the SBA 504 Loan Program.
The 504 program provides long-term, fixed-rate financing for major fixed assets that support business growth and job creation. Financing is arranged through a Certified Development Company working with a participating lender.
Eligible uses may include:
- Purchasing land or an existing building
- Constructing a new facility
- Renovating or improving a business property
- Purchasing long-term machinery or equipment
- Improving streets, utilities, parking areas, or landscaping associated with a project
The SBA-backed portion of a 504 project is generally available up to $5 million, with certain qualifying manufacturing or energy projects eligible for a higher maximum. Unlike the more flexible 7(a) program, 504 financing is primarily intended for fixed assets rather than routine working capital or inventory. (Small Business Administration)
For a business deciding between a 7(a) and 504 loan, the main question is how the funds will be used. A 7(a) loan can cover several business needs, while a 504 loan is focused more narrowly on major property and equipment investments.
SBA Microloans
Businesses that need a smaller amount of money may not require a large bank or SBA loan. The SBA Microloan Program provides loans of up to $50,000 through approved nonprofit intermediary lenders.
Microloan funds may be used for expenses such as:
- Working capital
- Inventory
- Supplies
- Furniture and fixtures
- Machinery
- Equipment
The lender, not the SBA, establishes many of the specific credit requirements and loan terms. Some intermediaries also provide business education or technical assistance as part of the lending relationship. (Small Business Administration)
Microloans may be worth considering for startups, home-based businesses, and smaller companies that need manageable financing but do not need a large commercial loan.
Community Development Financial Institutions
Community Development Financial Institutions, commonly called CDFIs, are mission-focused lenders that work to expand financial access in communities and among borrowers who may face challenges qualifying for conventional financing.
According to the Texas Governor’s financing and capital resources, nonprofit CDFIs may provide loans along with mentoring, workshops, and other business assistance. The state identifies organizations such as BCL of Texas, LiftFund, and PeopleFund as examples of nonprofit lenders serving Texas businesses. (Texas.gov)
A CDFI loan is not guaranteed approval or free funding. Borrowers must still demonstrate that the business and loan request are viable. However, a CDFI may consider businesses, communities, or financing situations that do not fit the standard model used by some conventional lenders.
The Texas Small Business Credit Initiative
The Texas Small Business Credit Initiative, or TSBCI, is designed to increase access to capital for eligible Texas small businesses. The program does not function as a traditional direct loan fund for business owners. Instead, it works through participating banks, credit unions, and CDFIs.
Texas currently administers three types of TSBCI support:
- The Capital Access Program
- The Loan Guarantee Program
- The Loan Participation Program
These programs reduce or share some of the financial institution’s risk, which can make lenders more willing to finance eligible small businesses that may have difficulty obtaining conventional credit.
Current business eligibility requirements generally include being a for-profit business domiciled in Texas, having fewer than 500 employees, and maintaining at least 51% of employees in Texas. Business owners apply through an approved participating financial institution rather than submitting a loan application directly to the Governor’s Office. (Texas.gov)
Because participating institutions and program requirements can change, businesses should review the current approved lender list before applying.
Texas Workforce Training Grants
Not every funding need requires a general-purpose business loan. When the goal is to train employees, Texas businesses may be able to receive assistance through workforce development programs.
The Texas Workforce Commission’s Skills for Small Business Program supports qualifying businesses with fewer than 100 employees. The program can help fund training for new full-time employees or provide skills training for existing full-time workers.
Training is generally delivered through a public community college, technical college, or the Texas A&M Engineering Extension Service. (Texas Workforce Commission)
This program does not provide unrestricted cash for operating expenses. It is specifically designed to help smaller employers strengthen their workforce. A business planning to hire, adopt new technology, improve technical skills, or prepare employees for expanded responsibilities may find this type of assistance more useful than borrowing money for training.
Small Business Grants in Texas
Grants receive significant attention because they generally do not need to be repaid. However, general startup and expansion grants for ordinary for-profit businesses are much less common than many entrepreneurs expect.
The SBA’s grant information clearly states that the agency does not provide general grants for starting or expanding a business. Most SBA grants support nonprofit organizations, educational institutions, entrepreneurship programs, scientific research, manufacturing assistance, or exporting initiatives. (Small Business Administration)
Businesses may still find targeted grant opportunities based on factors such as:
- Scientific research and development
- Advanced manufacturing
- Employee training
- Exporting
- Agriculture or rural development
- Energy efficiency
- Disaster recovery
- Specific industries or geographic areas
Federal opportunities can be researched through Grants.gov, while research-focused companies can review the Small Business Innovation Research and Small Business Technology Transfer programs.
The key is to search for programs that match a specific business activity. A company is more likely to find assistance for workforce training, product research, exporting, or a rural development project than a grant that can be spent on any business expense.
Businesses should also be cautious of companies that promise guaranteed government grants or request large upfront fees to identify supposed opportunities. Legitimate grants have defined eligibility requirements, application processes, deadlines, and permitted uses.
Investors and Equity Financing
Loans are not the only way to finance a business. Some owners raise capital from angel investors, venture capital firms, strategic partners, or other private investors.
With equity financing, the business does not take on a traditional loan with scheduled principal and interest payments. Instead, the investor generally receives an ownership interest or another financial stake in the company.
This approach may work for a business that:
- Has the potential to grow rapidly
- Operates in a scalable market
- Needs more capital than the owner can reasonably repay through a loan
- Can present a strong return opportunity to investors
- Is willing to share ownership and some decision-making authority
Equity financing can reduce immediate repayment pressure, but it has a long-term cost. The owner may give up part of the company’s future profits, value, and control.
The SBA’s business funding overview provides additional information about debt, investors, and other ways to finance a business. (Small Business Administration)
How to Choose the Right Funding Option
There is no single funding source that is best for every Texas business. Owners should compare options based on six practical questions.
1. What will the money be used for?
Long-term assets should generally be matched with longer-term financing. Using short-term, high-cost debt to purchase property or equipment can place unnecessary pressure on monthly cash flow.
2. How much capital is actually needed?
Borrowing too little may leave the project unfinished. Borrowing more than the business can productively use creates unnecessary interest and repayment obligations.
3. How quickly are the funds needed?
Some financing options require extensive documentation and review. A business with an immediate need may have fewer choices than one that begins planning several months before the funds are required.
4. Can the business support the payments?
A funding request should be based on realistic cash flow projections. The business needs enough revenue and available cash to make payments while continuing to cover payroll, taxes, inventory, rent, insurance, and other operating expenses.
5. Is the owner willing to provide collateral or a guarantee?
A lender may require business assets, personal assets, or a personal guarantee. Owners should understand exactly what they are agreeing to before signing.
6. Is the owner willing to give up equity?
An investor may remove the need for scheduled loan payments, but the owner will likely surrender part of the company’s value and authority. That tradeoff should be considered carefully.
Preparing a Strong Funding Request
Regardless of the funding source, preparation can improve the quality of the application and make conversations with lenders more productive.
The SBA recommends preparing a clear business case and organized financial statements when requesting additional capital. The business case should explain the total amount requested, the specific use of funds, the company’s management experience, and how the financing supports its plans. (Small Business Administration)
A lender or advisor may request:
- A business plan or funding proposal
- Personal and business credit information
- Business and personal tax returns
- Income statements and balance sheets
- Bank statements
- Cash flow projections
- A current business debt schedule
- Ownership and legal formation documents
- Information about available collateral
- Estimates or purchase agreements for equipment or property
- Personal financial statements from major owners
The exact requirements depend on the lender and program. Businesses should avoid sending applications to multiple financing companies without first understanding the terms and potential effect on their credit.
The SBA Lender Match tool can help businesses identify potential participating lenders. Business owners should still compare rates, terms, fees, repayment requirements, and lender qualifications before choosing an offer. Using the tool does not guarantee that a business will be matched or approved. (Small Business Administration)
Find Small Business Funding Help in Longview
Business owners do not have to sort through every funding option alone. The Longview Chamber’s Business Solutions resources connect local entrepreneurs and growing businesses with planning assistance, access-to-capital resources, business education, and useful relationships. (Longview Chamber)
The Chamber also partners with the UT Tyler-Longview Small Business Development Center. The SBDC provides no-cost, one-on-one business advising and can help entrepreneurs and business owners prepare SBA or conventional loan packages, review financial plans, and identify possible grants, investors, or alternative sources of capital.
The UT Tyler-Longview SBDC serves businesses in Gregg, Harrison, Marion, Rusk, Panola, and Upshur counties. (UT Tyler Longview SBDC)
Before taking on debt or giving up part of a company, business owners should understand the full financial effect of the decision. Starting with a clear plan and qualified guidance can help a business pursue funding that supports sustainable growth rather than creating a new financial burden.
Funding programs, approved lenders, interest rates, and eligibility standards can change. Businesses should confirm current requirements with the program administrator, lender, accountant, attorney, or business advisor before making a financial decision.
Frequently Asked Questions
What is the best small business funding option in Texas?
The best option depends on the purpose of the money and the financial condition of the business. A line of credit may work for short-term cash flow, while an SBA 7(a) loan may be better for expansion or purchasing a business. An SBA 504 loan is designed primarily for major fixed assets, and a microloan may be appropriate for a smaller funding need.
Are there grants to start a small business in Texas?
General startup grants for ordinary for-profit businesses are uncommon. The SBA does not provide general grants to start or expand a business. Most legitimate grant programs are tied to a particular purpose, such as research, exporting, employee training, manufacturing, agriculture, or rural development. Business owners can search Grants.gov and official Texas agency websites for targeted opportunities. (Small Business Administration)
Does Texas lend money directly through TSBCI?
Small businesses generally do not apply directly to the state for a TSBCI loan. Texas supports approved banks, credit unions, and CDFIs through capital access, loan guarantee, and loan participation programs. Eligible businesses should contact a participating financial institution for loan terms and application requirements. (Texas.gov)
How much can a business borrow through an SBA 7(a) loan?
The maximum SBA 7(a) loan amount is $5 million. The amount an individual business can receive depends on its qualifications, intended use of funds, available collateral, credit history, cash flow, and the participating lender’s underwriting decision. (Small Business Administration)
What is the difference between SBA 7(a) and 504 loans?
A 7(a) loan is more flexible and may be used for working capital, equipment, real estate, supplies, eligible debt refinancing, or a business acquisition. A 504 loan is primarily designed for major fixed assets, such as commercial property, construction, renovations, and long-term equipment. (Small Business Administration)
Can a startup qualify for business financing?
A startup may qualify, but the owner will usually need to present a strong business plan, realistic financial projections, relevant experience, personal investment, and a credible repayment strategy. Because a startup has limited financial history, the lender may place greater weight on the owner’s credit, preparation, collateral, and industry experience.
Where can Longview businesses get help applying for funding?
The UT Tyler-Longview SBDC provides no-cost business advising, including assistance with business plans, financial management, SBA and conventional loan packages, and identifying other sources of capital. The Longview Chamber’s Business Solutions page also connects businesses with local programs, relationships, and growth resources. (UT Tyler Longview SBDC)
