A business line of credit provides flexible, revolving access to capital that you draw from as needed and repay over time. Unlike a term loan, you only pay interest on the amount you actually use. For Texas businesses, government-backed options can offer better terms than conventional bank lines of credit.
SBA CAPLines Program
The SBA offers lines of credit through its CAPLines program, which provides four types of revolving credit:
- Seasonal CAPLine: For businesses with seasonal fluctuations in accounts receivable and inventory
- Contract CAPLine: For businesses that need to finance specific contracts or purchase orders
- Builders CAPLine: For small general contractors and builders
- Working Capital CAPLine: General-purpose revolving line of credit
CAPLines can provide up to $5 million with SBA guarantees that reduce lender risk, resulting in more favorable terms for borrowers.
CDFI Options in Texas
Community Development Financial Institutions offer lines of credit with more flexible qualification requirements than traditional banks. CDFIs in Texas serve businesses that may not meet conventional bank requirements due to limited credit history, lower revenue, or location in underserved communities. CDFI guide.
Qualification Requirements
- Minimum of one to two years in business (varies by lender)
- Personal credit score of 650 or higher for most government-backed options
- Annual revenue sufficient to support the requested credit line
- No recent bankruptcies or tax liens
- Business financial statements and tax returns
Application Steps
- Assess your needs: Determine how much revolving credit you need and what you will use it for
- Check your credit: Review both personal and business credit reports for accuracy
- Gather documents: Business tax returns, financial statements, bank statements, and business plan
- Contact SBA-approved lenders: Use the SBA Lender Match tool or contact your local SBDC for lender referrals
- Compare terms: Review interest rates, fees, draw requirements, and repayment terms from multiple lenders
Lines of Credit vs. Grants
A line of credit is a loan product that must be repaid. Grants do not require repayment. Many Texas businesses use both: grants for specific projects and a line of credit for ongoing working capital needs. Compare grants and loans.
Find All Funding Options
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