Texas is known as a favorable climate for business based in part on our comparatively low tax burden (we know from surveys that it definitely does not feel low to most of you) and favorable regulatory environment. Surprisingly, costs for some of the basics business needs like real estate, energy, wages, and taxes are lower in Texas than in the rest of the country. In 2018, these costs were 2% below the national average! Austin has more than 54,000 businesses with less than 100 employees, as recorded in the 2019 census. This impressive count may be due in part to the amazing resources available to local businesses in Austin. As every business owner knows, funding is one of the most important pieces of a solid business plan. Except for the independently wealthy among us, we all need funding to start a new business or to grow an existing one. Below is a brief outline of some of the funding resources available to Austin businesses.
ACCION Texas is a financial support system for small businesses that advances racial, gender, and economic justice for all. They are a nonprofit organization that provides credit to small businesses with at least 12 months in business, $50,000 or more in annual sales, owner of at least 20% of the business, owner at least 18 years or older.
Bank loans are obvious place to look for funding for a new business is to your bank. Some small local banks are more willing to work with new business owners and have non-traditional programs. Even with some banks working hard to support small business, it can still be very hard to qualify for bank loans.
BCL of Texas supports Texans to acquire wealth-building assets, such as home ownership and entrepreneurship, with the financial tools and education necessary to build personal net worth. They are a U.S. Treasury Certified Development Financial Institution (CDFI), a U.S. Small Business Administration Certified Development Corporation (CDC), and a HUD-certified housing counseling agency. They offer loans of $5,000 to $50,000 for small businesses.
Business Investment Growth, BiGAUSTIN is certified by the U.S. Department of Treasury as a Community Development Financial Institution (CDFI). They operate as a nonprofit providing training and loans to small businesses, especially minority- and women-owned businesses, in Central Texas. They lend up to $15,000 to start-ups and up to $50,000 for established businesses and have 1 – 6 year payback terms.
Capital CDC is a private, non-profit provider of small business financing throughout Texas, New Mexico, and Arkansas offering SBA 504 loans for fixed assets such as land or buildings. Additionally, they offer a Community Advantage Loan Program as a companion loan to assist small businesses in “under served” markets with the financing of working capital.
Family Business Loan Program is a public-private partnership between the City of Austin, HUD, and participating private lenders to offer low-interest loans to qualified small businesses that are expanding and creating jobs. They offer low interest rates, flexible repayment terms, and low equity requirements.
LiftFund provides credit and services to small businesses and entrepreneurs who do not have access to loans from commercial sources through direct capital including SBA microloans, SBA Community Advantage, SBA 504 Loans, EDA Loans in a 14-state footprint.
PeopleFund is a nonprofit organization, a U.S. Treasury certified Community Development Financial Institution (CDFI) and a SBA certified lender. Lends up to $250,000 to Texas businesses that do not qualify for bank loans and provide complimentary client business assistance and education.
Small Business Investment Company (SBIC) are privately owned and managed investment firms that use their own capital, plus funds borrowed at favorable rates with an SBA guarantee, to make venture capital investments in small businesses. They are licensed and regulated by the SBA.
Texas Venture Capital and Private Equity Directory provides investment firm profiles and financing frequently updated. This directory serves local entrepreneurs looking to raise capital, investors who wish to network with other investors and service providers who need a directory of investment firms.
U.S. Small Business Administration (SBA) operates a number of programs designed to assist small businesses access financing from lending institutions. You must go through the normal application process for an SBA loan. As a large government funding operation, they have many resources to offer.
Veteran Business Initiative is a public private partnership between the City of Austin in conjunction with the U.S. Department of Housing and Urban Development, which offers a low-interest rate loan and low borrower equity requirements to help create or expand a business. They offer low interest rates, flexible repayment terms, and low equity requirements.