Fund your business in Texas

When your own money isn’t enough, Texas’s options mostly work like the federal ones: a lender makes the loan, and a government program backs part of it. The state’s financing page lists SBA loans, nonprofit lenders, the Texas Small Business Credit Initiative, the Micro-Business Disaster Recovery loan program, TWC training grants, federal grants and USDA rural programs. The state money in that list moves through lenders and a training grant.

What’s different in Texas

• Six SBA district offices, in Dallas/Fort Worth, El Paso, Harlingen, Houston, Lubbock and San Antonio.
• The state backs loans through lenders. The Texas Small Business Credit Initiative (TSBCI), run by the Texas Economic Development & Tourism Office, has three programs: the Capital Access Program (CAP), the Loan Guarantee Program (LGP) and the Loan Participation Program (LPP). The money comes through an approved lender, not from the state.
• The state grant pays for training, not operations. TWC’s Skills for Small Business funds $2,000 of training per new employee and $1,000 per existing employee, for businesses with fewer than 100 employees, with courses at a public community or technical college.

Do this

1. Write down what you need and what it’s for. Equipment, inventory and rent are different asks, and programs are sorted by use.
2. Talk to a free advisor first. Small Business Development Centers (SBDCs) give free advice on financing; find yours with the SBA’s SBDC locator. Your SBA district office does the same and connects you with lenders: Dallas/Fort Worth, El Paso, Harlingen, Houston, Lubbock or San Antonio.
3. Understand who lends. SBA loans come from participating lenders, not the SBA. The SBA loans guide explains who makes each kind and what the SBA guarantees.
4. Ask your lender about TSBCI by name. The Texas Small Business Credit Initiative (TSBCI) works through an approved lender, not from the state: the lender enrolls your loan in one of its three programs. The CAP takes loans of $5,000 up to $5 million; the LGP guarantees up to 80% of unpaid principal on loans of $5,000 to $20 million. The borrower must be a for-profit business with fewer than 500 employees, based in Texas or with a majority of its employees here.
5. Check the TWC training grant if you’ll hire or train. Skills for Small Business is for businesses with fewer than 100 employees. It funds $2,000 per new employee and $1,000 per existing employee, and the training comes from a public community or technical college.
6. After a declared disaster, know the two loan programs. SBA disaster loans come directly from the SBA. The state’s Texas Micro-Business Disaster Recovery (MBDR) Loan Program lends through an approved CDFI after a declared disaster, to for-profit Texas businesses with no more than 20 employees.

What you get back

A loan offer from a lender, with rate, term and collateral. Any TSBCI guarantee or participation is between the lender and the Texas Economic Development & Tourism Office; your paperwork is with the lender. A Skills for Small Business award covers the courses in your application at the college you chose.