Arlington Small Business Financing Guide

How do I finance a small business in Arlington?

There are numerous ways of financing your small business in Arlington, Texas. Whether it is Microloans, Factoring, or SBA loans, one of these sources of financing can offer your business sufficient capital to grow. Here are six ways to fund your small business.

1. Microloans

The SBA Microloan program provides a maximum of $50,000 worth of financing to owners of small businesses. Unlike traditional business loans, it is quite easy to get a microloan. As an entrepreneur, you can acquire this loan even if your personal credit score is poor.

Additionally, this loan is accompanied by business and financial consulting. This advantage makes microloans an ideal alternative if you require business and financial help in growing your business. The SBA offers guarantees that allow specialized institutions to provide the financing.

2. Family and Friends Investors

Numerous small businesses acquire funding from family and friends investors. The investor will offer you financing as a loan or an acquisition of equity. While you will have to return the business financing in the case of a loan, equity ownership is another option. This does not require you to repay, but you will need to share every profit you make with them.

This form of business financing is common. However, if something goes wrong, your personal relationship with these alternative lenders could be impacted permanently.

3. Invoice Factoring

This kind of financing can help if you have outstanding invoices, but customers who take a month or two to pay. A factoring firm offers you an advance loan on invoices that are slow-paying. This advance helps free up your cash flow, allowing it to form part of the working capital that lets you operate your small business and acquire new customers.

A great benefit of this method is that the factoring company relies on the credit of the invoices as opposed to your credit. This benefit makes factoring an ideal choice for small business owners whose personal finances aren’t in the best shape, but whose companies are enjoying steady business.

4. SBA Loans

SBA Loans are alternative sources of funding for small businesses that have already started and require financing. Even though SBA 7(a) loans can offer up to $5 million, the average amount of small business loans offered is $350,000. This amount shows that this source of funds is mainly aimed at small businesses.

Instead of offering the loans directly, SBA offers guarantees to financial institutions that provide the financing. The loans go through a thorough underwriting process but are simpler to obtain than traditional loans.

5. Home Equity Line of Credit

Owners of small companies can also fund their businesses through the use of a home equity line of credit, or HELOC. They approach a bank to obtain a loan with their home equity as security. The proceeds of the loan are then invested in the company.

This loan is very risky, since your ability to keep your home depends on the success of your company. If your business is not able to repay the loan, you could lose your home as well as its equity. On the bright side, the home equity line of credit has the benefit of being cheaper as far as the interest rate since your home is the collateral.

6. Inventory Financing

Inventory financing is a specialized finance form that lets you leverage your current inventory before selling it as a finished good. It can be an ideal solution for a particular kind of venture.

However, this form of financing can be expensive and hard to manage. As part of the financing process, the inventory financing company needs to audit your financials, including expenses and incomes, as well as carry out a physical inventory check for you to qualify. The process is usually cumbersome for some companies.

What do I need to know about financing a small business in Arlington?

Small businesses in Arlington, Texas are not only supported by the private sector, but the government and not-for-profit organizations also support them. These institutions offer small businesses the funding they need to finance their operations and grow.

1. Service Provider Grant (SPG) For Small Businesses

The Office of Small Business Assistance of the Governor accepts applications for programs that allow small business service providers who are based in Texas to diversify and enhance activities and projects that benefit small businesses and historically underutilized businesses (HUBs) in the state. The grants will offer small business service providers a higher degree of creativity and flexibility in their portfolio of offering to HUBs and small businesses.

2. Texas Product/ Business Fund

The Texas Product/Business Fund offers asset-backed funding to firms doing businesses in Texas. Funding is performed in terms of direct asset-based debt with loan rates that are competitive. Loans are normally amortized throughout the life of the asset.

3. Jobs 4 Texas (J4T)

Jobs 4 Texas is a creative funding program engineered to boost the access of small companies to financing and allow private business owners to make decisions that are market-driven in order to grow employment. The program won an award worth $46.5 million from the US Department of the Treasury under the State Small Business Credit Initiative.

4. BCL of Texas

BCL of Texas was established in the year 1990 as a not-for-profit lender in the state of Texas. The lender successfully fosters community and business development. They offer commercial real estate loans and business capital throughout the state. In its mission to create employment via business development, the lender has assisted in the creation of jobs for over 5,000 Texans. They also offer businesses with technical and counseling assistance in addition to originating, underwriting, processing, closing, and servicing business loans for healthy growing businesses.

Whichever finance option you go for, be sure to look at all the options available so that you pick the one that will meet your business needs. You’ll probably need to write a business plan and provide financial statements for some of these forms of small business financing, so be ready to do so.

Whether it is a private, government, or not-for-profit lender, there are many ways to obtain the financing you need for your Arlington small business.


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