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Houston Business Loans: Working Capital for Houston Small Businesses

Houston Business Funding

The city of Houston is often thought to be known for its contributions in space, the medical industry, and science. Leading in healthcare sectors, the United States 4th largest city still has a broad economy that is occupying energy, manufacturing, transportation, and aeronautics. Houston has welcomed big businesses and in turn, has benefited from the large corporations adding thousands of jobs contributing to Houston becoming one of the fastest-growing cities in America. Along with no corporate or individual income tax and a rather relaxed regulatory environment, plus an exceptionally trained and skilled workforce, Houston remains one of the best places to invest. Thus there are many accomplished industries within Houston that are vital to be informed about as new entrepreneurs, leaders, and workers to succeed within its scope as well as the recent effects of hurricane Harvey.

Thus with the recent damage of over 700 businesses throughout the state, Houston industries, in particular, are now forced to invest in measures to combat future flood damage or any other potential environmental setbacks as much as possible. With Houston being one of the most economically influential states in the U.S., governments have little choice but to plan immediately. Hence, thousands of companies that were affected are already taking action as they negotiate with insurance companies and take any other necessary steps to get back on track. Still, Houston has a lot to look forward to in the realm of business and with their current ranking of success, months of diligence and keen planning—industries can continue to thrive.

The many businesses that Houston prospers in are oil, natural gas, seaports, biomedical research, and wind and solar are all growing economic foundations that have made the city valuable within the global financial system. Out of every trade, Houston, recognized for its energy commerce, has been at the center of innovation. Houston serves as the U.S.’ energy headquarters and includes almost every sector of the oil and gas industry such as production, exploration, transmission, technology, marketing, and supply. It currently employs almost 90,000 engineering and architecture professionals in which many are involved in the energy industry and are helping to keep Houston on top. It is also currently ranked as No.1 among the top U.S. manufacturing cities and central to the largest medical complex in the world-the Texas Medical Center. Home to the brightest minds in medicine, it continues to be the forefront of advancing life sciences. For instance, most heart surgeries are performed here more than anywhere else in the world, and it is home to the largest children’s, and cancer hospitals in the world.

However, in the end, Houston industries can recover by understanding and be knowing the culture of the city; helping to inform businesses of what their target consumers and the market would be—despite the hindrance of the hurricane. For instance, it ranks in the top 10 of the greenest cities in the U.S. in regards to park acreage per capita offering more than a 300-mile interconnected bikeway network that spans along bayous and within parks. It is also home to the second largest concentration of Fortune 1000 companies in the country just behind New York proving to have cultivated a strong business sector. Still, it does not stop with its green and business savvy culture; it also has a prominent art scene. There are a total of 20 cultural districts, of which six are in Houston, and their events report 9.2 million visits per year, and it is one of the only few cities in the U.S. with resident professional companies in the four disciplines of the performing arts: opera, ballet, symphony and theater. Plus, they are considered to have one of the best culinary scenes in the country with more than 10,000 restaurants in Houston spanning culinary choices that represent more than 70 countries and American regions, serving a diverse market. Though the landscape, arts, and culinary trades make up part of the Houston culture, space and the medical industry both give historical and financial significance to Houston’s presence putting it in a league of its own. Being native to the Johnson Space Center, it continues to be home to the space industry and a representation of ingenuity, breakthroughs, and technological advances.

Many of these advances and breakthroughs would not be possible without the diverse community of people living in Houston. More than 145 different languages are spoken, and more than a third of its residents older than five speak a language other than English at home. Furthermore, if you look at the four major ethnic groups—Anglo, Asian, black, and Latino—all have substantial numbers in Houston and no one group dominates; creating a much equal balance than you would find in other major cities such as Los Angeles or New York. As we can see, there are many factors to consider and be aware of when joining the commercial culture of Houston that can contribute to the success of your business.

Types of Houston Business Loans and Working Capital

Obtaining access to financing for a Houston small business isn’t necessarily difficult – but obtaining access to capital that is also affordable and helps grow your company’s margins can be challenging. The key is finding the loan with the lowest rates, longest terms, minimal fees, and a funding time that fits with your growth plans. Below we will take a look at the most common small business financing options for Houston companies.

SBA Loans

Another type of conventional financing offered by banks and credit unions. The difference between a SBA loan and a traditional bank term loan or line of credit is the Small Business Administration’s loan guarantee that comes along with it. With a SBA enhancement, if the borrower is unable to repay their loan and ends up defaulting, the SBA lender will have a substantial portion of their losses covered by the SBA. Loans offered through the SBA lending program can be used for business acquisitions, startup financing, real estate financing, working capital, business expansion and a variety of other uses.

Rates 5-8%
Terms 3-25 years
Funding Amounts $50,000-$5,000,000
Collateral Required
Fees Medium costs


Bank Loans

Bank loans offer Houston small businesses with affordable financing structured as either a term loan or a line of credit. Bank loans are used for a variety of purposes, including: purchasing real estate, refinancing balloon mortgages and hard money loans, working capital, equipment upgrades and purchases, along with just about any other operational or capital purchase.

Rates 5-10%
Terms 1-30 years
Funding Amounts $50,000-$5,000,000
Collateral Required
Fees Medium costs



This is a form of alternative financing that involves a Houston small business selling a portion of their account receivables and invoices to a 3rd party funding company in exchange for access to immediate working capital. Of course, the funding company will purchase the accounts receivables at a discount, and may also withhold a portion of the value until the customer pays the invoice(s).

Rates 1-3% monthly
Terms 1-2 years
Funding Amounts $100,000-$5,000,000
Collateral Required
Fees Medium costs


Non-Bank Alternatives

This type of alternative financing is the mid-ground between conventional bank-rate business financing, and high-interest merchant cash advance financing. Unlike a traditional loan, a mid-prime non-bank loan doesn’t require lots of documentation, nor does it require perfect credit. Additionally, the funding time is much quicker than a conventional bank loan.

Rates 1-2% monthly
Terms 1-2 years
Funding Amounts $100,000-$5,000,000
Collateral Required
Fees Medium costs


Asset Based Loans

Asset based financing is a way for Houston businesses seeking working capital to monetize the equity on their balance sheets. Unlike conventional lenders that require a strong debt-service-coverage-ratio to approve a Houston business for a loan, an asset based lender is willing to overlook revenue shortfalls and cash-flow issues because their risk is minimized by collateralizing business assets such as real estate, equipment, AR and inventory.

Rates 8-25%
Terms 1-3 years
Funding Amounts $100,000-$5,000,000
Collateral Required
Fees Medium costs


Cash Advance

A merchant cash advance or ACH cash advance is the purchase of a Houston small business’s bank deposits or merchant credit card transactions at a discount to the funder. A cash advance can be approved almost immediately and may fund in as little as 24 hours with minimal paperwork and documentation. While access to cash advances are easy, the rates and terms associated may make the cost of borrowing prohibitive for many Houston small businesses.

Factor rates 1.10 – 1.50
Terms 3-24 months
Funding Amounts $5,000-$2,000,000
Collateral Not required
Fees High costs


We understand that recent events have put a strain on Houston small businesses. At this time, many Houston companies are looking for working capital to help manage cash-flow issues, or may be seeking funding to help refinance existing debt. Whatever your situation, if you are a Houston small business looking to explore all the financing options available, please reach-out to one of our funding specialists and they’ll help you navigate the process.

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About the author
Domonique Cox

Domonique is a Minnesota native that earned her bachelors from The University of Arizona with a degree in English and Film Studies. Though books and writing are not her only interest, you can find her engaging in nutritional sciences, environmentalism, vegan cuisine, filmmaking, old school dancing, tennis, running, sound engineering, and enjoying satirical dark comedies or listening to the poetic lyrics of Bob Dylan. She is now based in Los Angeles as a content writer for GUD Capital where she spends her spare time honing her writing and directing skills. 

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GUD Capital is a nationally recognized leader in the financing industry for providing the best business lending solutions available to small and mid-sized businesses. We leverage our network of 4,000 competing commercial lenders to provide your business the largest selection of commercial financing options.

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