The U.S. Small Business Administration (SBA) does not lend money directly to businesses. Instead, SBA loans are issued by participating banks, credit unions, and community lenders, with the SBA providing a partial guarantee that reduces the lender's risk. This guarantee allows lenders to offer longer repayment terms, lower down payments, and more favorable interest rates than conventional commercial loans.
Texas is one of the largest SBA lending markets in the country. This guide walks through the main SBA loan programs, what you need to qualify, and how to start the process as a Texas business owner.
Main SBA Loan Programs
SBA 7(a) Loan Program
The 7(a) program is the SBA's most common loan program. It provides up to $5 million for working capital, equipment purchases, leasehold improvements, business acquisitions, and debt refinancing. Repayment terms extend up to 10 years for working capital and equipment, and up to 25 years for real estate.
SBA 504 Loan Program
The 504 program provides long-term, fixed-rate financing for major assets such as commercial real estate and heavy equipment. Loans are structured through a Certified Development Company (CDC) and a participating lender. The typical structure is 50% from the lender, 40% from the CDC (backed by SBA), and 10% from the borrower as a down payment.
SBA Microloan Program
Microloans provide up to $50,000 through community-based nonprofit lenders. These loans are designed for startups and smaller businesses that need modest capital for inventory, equipment, supplies, or working capital. Texas microlenders include PeopleFund, LiftFund, and BCL of Texas.
SBA Loan Eligibility Requirements
While each lender sets its own underwriting criteria, general SBA eligibility requirements include:
- The business must operate for profit and be located in the United States
- The owner must have invested equity in the business
- The business must have exhausted other financing options first
- The business must meet SBA size standards for its industry
- The owner must have reasonable personal credit history
- The business must demonstrate ability to repay the loan from cash flow
Steps to Get an SBA Loan in Texas
- Prepare your financials: Gather at least two years of business and personal tax returns, year-to-date financial statements, and a personal financial statement for each owner with 20% or more ownership.
- Write a business plan: Many lenders require a business plan that explains your operations, market, revenue model, and how loan proceeds will be used.
- Choose the right SBA program: Match your financing need to the appropriate program. Use 7(a) for general purposes, 504 for real estate or major equipment, and microloans for smaller capital needs.
- Find an SBA-approved lender: Use the SBA Lender Match tool at sba.gov or contact your local SBA district office. Texas has SBA district offices in Houston, San Antonio, Dallas/Fort Worth, El Paso, and Lubbock.
- Submit your application: Complete the lender's application along with SBA Form 1919 and any additional documentation required.
- Underwriting and approval: The lender underwrites the loan and, if approved, submits it to SBA for guaranty authorization. Processing times vary but typically range from a few weeks to several months.
Texas SBA Resources
- Texas SBA District Offices: Houston, San Antonio, Dallas/Fort Worth, El Paso, and Lubbock offices provide guidance and lender referrals.
- SCORE Texas chapters: Free mentoring from experienced business professionals who can help with loan preparation.
- Texas SBDCs: Small Business Development Centers across the state provide free consulting on financial planning and loan applications.
- CDFIs: Community Development Financial Institutions like PeopleFund, LiftFund, and BCL of Texas serve borrowers who may not qualify with traditional banks.
Common SBA Loan Mistakes to Avoid
- Applying before your financials are organized and current
- Choosing the wrong SBA program for your specific need
- Not shopping multiple lenders for terms and service quality
- Underestimating the time required for processing and closing
- Failing to explain clearly how loan proceeds will be used
Find Programs That May Fit Your Business
SBA loans are one category of business financing available to Texas businesses. Depending on your industry, location, and growth plans, you may also qualify for grants, tax credits, workforce training programs, and state or local incentives.
Not sure which programs may fit your business? Our free screening report checks your business against 150+ verified programs and shows you which ones may match. Start your free screening →