Alamo City Startups: How to Find Small Business Loans in San Antonio

Starting a small business may seem intimidating at first, but if you’ve got a solid idea and a plan, you’re in luck! Texas is home to more than 2.2 million small businesses, and in 2019, San Antonio was named one of the 20 best major U.S. cities to start a small business. Here are the eight steps to starting a small business in San Antonio.

1.  Conduct Market Research. Before you even consider quitting your day job, you must conduct market research to identify your customers, their needs, and how your business can enter that space with a unique offering. The U.S. Small Business Administration has a great guide on market research to help get you started, and there are countless smaller non-profits and trade associations – like San Antonio SCORE and the UTSA Small Business Development Center – that can provide you with educational resources during this critical phase.
2. Write a Business Plan. Think of your business plan as a roadmap for your company. Your business plan is where you take your idea and translate it into actionable steps for the future. Your plan should state the mission of your business and how you intend to structure and run it. The best business plans also include a projected budget for the first several years, a persona (or profile) of your ideal customer, and insights into how you will successfully compete with other businesses in this space. The SBA has a great guide to writing a business plan to help you get started.
3. Finance Your Business. Financing is the step where many aspiring small business owners stall. Many people try to finance businesses out of their pockets at first, only to discover later that they need additional funding to allow the company to grow and thrive. Luckily, there are several government business loans available to small businesses in Texas. More on that in a moment.
4. Choose a Business Location. Let’s say you’re starting a small retail shop. Are you opening a brick and mortar store, a kiosk at the mall, an online store, or some combination of the three? Depending on which you choose, you may be responsible for different permits, licensing, and taxes. Be sure to do your research on potential costs: physical locations may include additional infrastructure costs, but it may be easier for you to quickly scale your business with the right shop in the right spot.
5. Choose Your Business Structure and Registration. Determine the legal structure of your business – sole proprietorship, limited liability company, partnership, etc. Choose a business name and register with all appropriate agencies. If you haven’t already, now is when you’ll want to speak with an attorney and an accountant to ensure you understand the long-term effects of your business structure on your business.
6. Obtain Federal and State Tax IDs. Federal and state tax IDs enable your business to pay taxes. Additionally, the tax structure for companies can be complicated, so make sure you do your research, consult your CPA, and take a long, hard look at the tax responsibilities for your business before day one.
7. Apply for All Business Licenses and Permits. The Texas Business Permit Office (BPO) provides information on state permits and licenses required for various types of businesses in the state. 
8. Open a Business Bank Account. Once you have the appropriate legal paperwork filed, opening a small business checking account is easy and makes doing your taxes and accounting a breeze. Given the complexities of this process, opening a business account may seem relatively unimportant. Still, this step is key to keeping your personal funds and your business funds separate or suffer the tax consequences.

Small Business Loans in Texas

In Step 3, we mentioned government business loans as being a viable option for funding your small business. The U.S. Small Business Administration (SBA) offers small business loans in Texas and all over the country. 

How SBA Loans Work

The SBA does not fund SBA loans directly. These loans are serviced by credit unions, banks, and private lenders. The Small Business Administration guarantees a portion of the funds of government business loans, which include: 

• The SBA 7(a) loan. This loan funds working capital for long-term capital, facilities, and equipment financing in small business expansion. It is the most popular SBA loan for small businesses and guarantees loans of up to $5 million.
• The SBA 504 loan. This type of loan provides financing for real estate, facilities, equipment, and other fixed assets necessary for business operations. It guarantees loans of up to $5 million.
• The SBA Disaster Loan. These are situation-specific loans issued to repair or replace certain items damaged or destroyed in a declared disaster. These loans can be up to $2 million.
• The SBA Microloan Program. The Microloan program provides loans to help start or grow small businesses and specific non-profit childcare facilities. These loans can total anywhere between $2,000 and $50,000.

SBA 7(a) Loan Terms

When the SBA guarantees a loan, it is effectively sharing the risk inherent in any new business. Since their contributions can reduce the potential loss by up to 75%, SBA participation can be the difference between securing the funds you need to start your business and being rejected by prospective lenders.

The SBA provides the following guarantees for the 7(a) loan:

• 85% of loans for amounts of $150,000 or less
• 75% of loans for amounts greater than $150,000 (up to $5 million)

SBA 7(a) Loan Requirements

To be eligible for a 7(a) loan, your small business must be: 

• Physically located and operate in the U.S.;
• Officially registered;
• A for-profit company (non-profit organizations are not eligible);
• Operating legally. 

Additionally, the owner must have invested equity in the business in the form of time or money. The borrowing business must not have defaulted on a federal loan or child support in the past. Finally, non-citizens are eligible for 7(a) loan funding provided that their new business calls the United States its home.

SBA 7(a) Loan Disqualifiers

The Small Business Administration will not approve an SBA loan to a business in which the lender owns an equity interest. The department will also deny a guaranty on a loan in which the company employs an associate who has been indicted for a felony.

There are also certain types of businesses deemed ineligible for SBA loans:

• Non-profit organizations;
• Lobbyists;
• Lenders;
• Life insurance companies;
• Religious institutions and religious education centers;
• Businesses that restrict patronage for a reason other than capacity (e.g., private clubs);
• Speculative businesses (such as a commercial real estate developer, oil speculator, or companies primarily engaged in R&D); and,
• Firms involved in gambling activities (with some exceptions).

How to Apply for SBA Loans in Texas

While there are a variety of lending options available to prospective small business owners, you may find the process at least somewhat dependent upon the size of your loan. For example, the lending team at Amplify Credit Union typically requires a $100,000 minimum loan amount for any new commercial clients, a criterion that will satisfy most businesses here in the State of Texas. Working with an SBA-approved lender like Amplify also ensures that you will have expert guidance on the process every step of the way, making it easier to navigate the tricky loan process.

For smaller loan amounts, the SBA website has an online referral tool called Lender Match that connects small businesses with approved SBA lenders. Just fill out an online form with necessary information about your business; Lender Match does not require specifics about your business, such as detailed financial information. It takes the short answers you provide and matches you with lenders who are a potential match to service your small business loan. 

If you have additional questions about SBA lenders in San Antonio, you can call the SBA San Antonio District Office at[SS13]  (210) 403-5900 or visit the district office at:

San Antonio District Office
U.S Small Business Administration
615 E Houston St. Suite 298 
San Antonio, TX 78205

San Antonio Small Business Success Stories

Still on the fence about government small business loans? Hopefully, these San Antonio success stories can offer some inspiration:

• Trinity Vision Center. San Antonio Optician Dr. Justin Kim opened Trinity Vision Center in 2007. Soon after, the economic downturn hit at a time when Dr. Kim needed to be expanding his new client base. Luckily, as a veteran, he was able to take advantage of SBA’s Patriot Express Loan Program, which provided loans for veterans to start or expand their small businesses. This allowed Dr. Kim to increase his marketing efforts and grow his young company. While the Patriot Express Loan Program has ended, this success story is still a great reminder of the many kinds of government small business loan programs you can discover with just a little research.
• Edible Arrangements – Laredo, TX. In 2011, entrepreneurs Rosalva Guerra and Claudia Villareal made an appointment at Texas A&M International University’s Small Business Development Center, where they received business counseling to determine if their decision to pursue ownership of an Edible Arrangements franchise store was viable. They also enrolled in the SBDC’s Business Management Certificate Program to advance their business knowledge. The guidance they received paid off – the duo secured a small business loan for $250,000 to start their franchise. To date, their Edible Arrangements location has created seven jobs. 

In the end, even if you have the best idea or product in the market, starting a business can still be a time-intensive process. Working with supporting organizations like the Small Business Administration and veteran lenders like Amplify Credit Union can help you navigate those early days of your business. With a lot of hard work and a little bit of luck, you’ll be in business for yourself in no time at all.