Small Business Financing
Guide to Financing Your Small Business in Houston
Everything you need to know get funding for your business in Houston
Starting a small business is an exciting but daunting goal. Not only do you need a brilliant idea, but you need the money to get it started. Luckily, if you’re in Houston, you have many options to finance your business.
Your business plan can serve as a template for what kind of financing you can receive and how much--your projected revenue, personal credit scores, and amount of collateral will be a factor in most of your financial options. Depending on your type of business, the type of financing you choose will determine your financial timeline.
To help you get started, we’ve outlined some Houston financing options below.
Small Business Bank Loans
Small business loans are usually the first stop for new businesses looking to find capital. You can apply for loans through commercial banks, credit unions, or federal agencies.
The SBA partners with Houston banks and lenders by offering a 7(a) loan. The 7(a) loan provides an amount between $5,000 and $5 million through a partner bank in Houston.
Find out what you need to qualify for a 7(a) loan here.
Outside the Houston SBA, banks and credit unions offer business loans and credit lines that you can apply for as a new business. Whether you have an existing account, or you’re looking for a new bank, here’s a list of the top small business banks in Houston:
Small business bank loans are a great option because of their typically low APRs. The APR will be based on the size of the loan as well as the lender or bank you choose. Most small business banks in Houston will also allow you to choose the length of the loan repayment, so you can adjust your monthly fees.
In a growing commerce city like Houston, banks aren’t your only option. Nonprofit organizations have been expanding to fund and support the small business community across the U.S., like Houston Business Development, Inc., who offers loan programs to get small businesses get started in the city.
Commercial Real Estate Loans
If your small business plans to have a brick-and-mortar location in Houston, you’ll need additional capital for a lease, renovation, insurance and more. Commercial real estate loans can be a great option for these expenses, available through banks like standard business loans.
Before you apply for a commercial real estate loan, you should consult with a Houston commercial real estate agent or company. You can search Houston commercial real estate listings with Commgate, or you can find an agent at one of the following Houston real estate agencies:
Like standard business loans, commercial real estate loans have low APRs and short and long-term payment options.
You can also look to business credit cards to finance your small business or startup. These are most convenient for the following:
You can combine two or more credit cards to gain a higher credit line, and they can be combined for a lower overall interest rate. Business credit cards also allow owners to avoid posting personal collateral or down payments from their own accounts.
For a business credit card, banks like the Member’s Choice Credit Union offer business cards for new companies and ongoing financing. You can also apply for a business credit line at Amegy Bank or the Houston Federal Credit Union.
Peer Lending Loans
Like nonprofits, peer lending and angel investing is a booming resource in the small business community of Houston. Peer lending clubs can connect you with local or national investors in your industry that are hoping to support small businesses.
Finding a peer lender or investor in Houston through a lending network relies on having a solid business plan and strong financial projections. This will help potential investors decide if your business is a sound investment.
In Houston, peer lenders can be contacted through a few resources, like Texas Direct Lenders and Peerform.
As a new business, making profits is a primary goal for the first few years. Different business models acquire capital through invoicing, which can mean a drawn-out turnaround time for profits. Using invoice factoring, processing payment from your clients can turn into working capital.
You have many options for Houston factoring companies, like Charter Capital, or you can use a service like American Prudential. Invoice factoring can provide quicker capital, but it typically has a higher APR than other financing options.
Home Equity Credit
Using collateral to fund a new business is also a viable option. If you own your Houston home, car, or other personal assets, these can be used as capital with a small business bank to finance your business. It’s less expensive than a small business loan, typically with low or no interest rates, but you risk losing your home if you default.
You will have to work with a bank and mortgage company for a home equity line of credit. If you don’t have a mortgage broker in Houston, there are many to consult with, like Fairway IMC.
In addition to your main source of funding, other sources can be used to supplement the financing options above:
These options will typically enhance any kind of financing that you find in Houston, instead of being used as your primary source of funding.
Once your financing is secured, you’ll want to start looking for commercial space as well as starting to market your business with a website. Check out our guides for Houston real estate and our how-to on website creation!
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