Small Business Loan Guide for Texas (2026)
Reviewed by DocDraft Legal Team · Texas · Last updated 2026-05-18
Small-business borrowers in Texas navigate a stack of federal SBA programs and state-administered capital-access programs. The federal entry point is six SBA District Offices in Texas (Dallas / Fort Worth, El Paso, Houston, Lower Rio Grande Valley, San Antonio, and West Texas); the state-side resource layer includes the SBA 7(a), 504, and Microloan products that reach every U.S. state, alongside any Texas-administered revolving-loan or microloan funds (consult the state code). Free pre-application advising is available through Texas's four regional SBDC networks (North Texas SBDC (ntsbdc.org), Northwest Texas SBDC (nwtsbdc.org), South-West Texas SBDC (txsbdc.org), and Texas Gulf Coast SBDC (sbdcnetwork.uh.edu)). Below are the steps, documents, and state rules that apply.
Key Considerations
Texas caps interest on non-exempt business loans by statute. Texas Finance Code default maximum interest rate is 10% per year unless otherwise provided by law (Tex. Fin. Code § 302.001). Optional rate ceilings under Chapter 303 raise this to 18% per year for many commercial loans (Tex. Fin. Code § 303.009). For commercial loans the actuarial method governs the maximum-rate calculation (Tex. Fin. Code § 306.004). The Texas Supreme Court has clarified that maximum commercial-loan interest must be calculated using the actuarial method on the declining principal balance. Default consequences are equally state-defined: default triggers a layered remedy set: action on the note for the deficiency, action on the personal guaranty against the principal, Article 9 disposition of collateral, and the post-judgment collection tools available under state civil procedure (consult the state code) A borrower who skims the loan agreement without checking these two layers is agreeing to terms whose ceiling and downside are set by state code, not just by the contract.
A secured loan in Texas ends with a UCC-1 filing and, for eligible borrowers, can be paired with a state diversity certification. Texas Secretary of State, UCC Section. Effective post-August 29, 2025, all UCC filings must be submitted online through the SOS Portal (paper filings no longer accepted). UCC-1 initial financing statement filing fee: $5.00. The certification track runs separately: Texas Comptroller of Public Accounts administered the Historically Underutilized Business (HUB) Program for minority-, women-, and service-disabled-veteran-owned business certification for state procurement. NOTE: As of October 28, 2025, the Acting Texas Comptroller froze issuance of new and renewed HUB certifications pending program review. Under emergency rules announced December 2, 2025, the HUB program was restructured: businesses owned by people of color and women are being removed and the program renamed to 'Veteran Heroes United in Business' (VetHUB), with certification limited to service-disabled veterans. The UCC-1 fixes the lender's priority position; the certification expands the borrower's addressable market for state contracts.
If you are seeking a small-business loan in Texas, start with two federal-partner resources: the six SBA District Offices serving Texas (Dallas / Fort Worth, El Paso, Houston, Lower Rio Grande Valley, San Antonio, and West Texas), which administers SBA 7(a), 504, and Microloan access in the state, and Texas has four regional SBDC networks: North Texas SBDC (ntsbdc.org), Northwest Texas SBDC (nwtsbdc.org), South-West Texas SBDC (txsbdc.org), and Texas Gulf Coast SBDC (sbdcnetwork.uh.edu), the no-cost advisory network. The SBDC supports loan-packaging work; the District Office tracks lender activity and runs outreach events that surface lenders actively writing small-business credit in Texas.
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Relevant Documents
The Texas document stack runs roughly as follows: the SBA borrower form (1919 for 7(a) or 1244 for 504), the promissory note, the security agreement, the UCC-1 financing statement, and a personal-guaranty addendum from each principal owner. UCC-1 filings in Texas go to Texas Secretary of State, UCC Section. Effective post-August 29, 2025, all UCC filings must be submitted online through the SOS Portal (paper filings no longer accepted). UCC-1 initial financing statement filing fee: $5.00. Texas is served by six SBA District Offices: Dallas / Fort Worth, El Paso, Houston, Lower Rio Grande Valley, San Antonio, and West Texas.
Loan Agreement
This is the primary document that outlines the terms of the loan, including the loan amount, interest rate, repayment schedule, and default provisions. It establishes the legal relationship between you as the borrower and the lender.
Personal Guarantee
For many small business loans, lenders require the business owner to personally guarantee the loan. This document makes you personally liable for repaying the debt if your business cannot.
Promissory Note
This document is your written promise to repay the loan according to specific terms. It's often simpler than the full loan agreement but creates a legally binding obligation to repay the borrowed funds.
Security Agreement
If you're offering collateral for the loan, this document identifies the assets being pledged as security and gives the lender rights to those assets if you default on the loan.
Relevant Laws
Texas Finance Code - Chapter 306: Interest Rates
This law establishes the maximum interest rates that lenders can charge for business loans in Texas. For business loans, Texas allows parties to contract for higher interest rates than consumer loans. Understanding these limits is crucial to ensure your business loan doesn't include usurious interest rates, which could make the contract unenforceable.
Texas Business & Commerce Code - Chapter 9: Secured Transactions
If you're using business assets as collateral for your loan, this law governs how lenders can secure their interest in your property. It outlines the process for creating security agreements, filing financing statements, and establishes lenders' rights if you default on the loan.
Texas Business Organizations Code - Chapter 101: Limited Liability Companies
If your business is an LLC, this law affects your ability to take on debt and may require specific authorization in your company operating agreement. Some operating agreements restrict borrowing without member approval, which could impact your loan process.
Equal Credit Opportunity Act (ECOA)
This federal law prohibits lenders from discriminating against credit applicants based on race, color, religion, national origin, sex, marital status, age, or because you receive public assistance. As a small business owner in Texas, you're protected by this law during the loan application process.
Truth in Lending Act (TILA)
While primarily focused on consumer loans, certain provisions of TILA may apply to small business loans in Texas, particularly if you're a sole proprietor. This law requires lenders to disclose key terms and costs in writing, including the annual percentage rate (APR), term of the loan, and total costs to the borrower.
Texas Deceptive Trade Practices Act (DTPA)
This law protects small business owners from deceptive practices by lenders, including false advertising, misrepresentations about loan terms, or other unfair business practices. If a lender engages in deceptive practices during your loan process, you may have recourse under this act.
Regional Variances
Major Metropolitan Areas
Houston has additional small business loan programs through the Houston Business Development Inc. (HBDI) that offer more favorable terms than standard commercial loans. These city-specific programs may have different application requirements and qualification criteria than statewide options.
Dallas offers the Southern Dallas Development Fund specifically for businesses in southern Dallas neighborhoods, with lower interest rates and more flexible terms than conventional loans. The city also has special economic zones where businesses may qualify for additional lending incentives.
Austin's Economic Development Department provides unique loan programs for creative businesses and tech startups that aren't available in other Texas cities. These loans often have lower collateral requirements and specialized terms for the city's innovation-focused economy.
Border Regions
El Paso businesses can access unique binational loan programs due to proximity to Mexico, including special SBA loans for export businesses. The city also offers additional loan assistance for businesses engaged in cross-border commerce that may not be available elsewhere in Texas.
Laredo has specific loan programs for import/export businesses through the Laredo Development Foundation with different documentation requirements than standard Texas business loans. These programs often accommodate the unique needs of businesses operating in the border economy.
Rural Counties
Rural counties in Texas often qualify for USDA Rural Development loan programs with more favorable terms than urban areas. These counties may also have access to special Texas Department of Agriculture loan programs not available to businesses in metropolitan areas.
Special Economic Zones
Businesses in designated Enterprise Zones throughout Texas may qualify for specialized loan programs with reduced interest rates and more flexible terms. These zones have different qualification requirements and loan limits than standard commercial loans in non-designated areas.
Texas Opportunity Zones (created under federal tax law) offer special investment incentives that can affect business loan terms and availability. Lenders may offer more favorable terms for businesses operating in these designated census tracts compared to other areas.
Suggested Compliance Checklist
Assemble the SBA application file
Before applying days after startingStandard contents include the borrower's last two to three years of tax returns, interim financials, a written use-of-funds plan, and the SBA borrower information forms (1919 for the 7(a) program; 1244 for the 504 program). The active SBA District Office for Texas is the six SBA District Offices serving Texas (Dallas / Fort Worth, El Paso, Houston, Lower Rio Grande Valley, San Antonio, and West Texas).
Engage Texas has four regional SBDC networks: North Texas SBDC (ntsbdc.org), Northwest Texas SBDC (nwtsbdc.org),.
Before applying days after startingSBDC advisors look at the financial projections, the use-of-funds story, and the lender-fit question so the borrower walks in with a packet that has already been stress-tested.
Verify the rate is lawful under Texas usury rules
Before closing days after startingTexas Finance Code default maximum interest rate is 10% per year unless otherwise provided by law (Tex. Fin. Code § 302.001). Optional rate ceilings under Chapter 303 raise this to 18% per year for many commercial loans (Tex. Fin. Code § 303.009). For commercial loans the actuarial method governs the maximum-rate calculation (Tex. Fin. Code § 306.004). The Texas Supreme Court has clarified that maximum commercial-loan interest must be calculated using the actuarial method on the declining principal balance. Where the rate exceeds the cap, the loan must rely on a statutory exemption (most commonly the bank-lender or licensed-finance-lender exemption).
Review the personal-guaranty addendum line by line
Before signing days after startingTex. Fam. Code § 3.202(c) The scope of the guaranty, the events that trip recourse, and any spousal-joinder requirement should be understood before signing, because guaranty enforcement is governed by state contract law.
Review the UCC-1 filing
Before signing days after startingTexas Secretary of State, UCC Section. Effective post-August 29, 2025, all UCC filings must be submitted online through the SOS Portal (paper filings no longer accepted). UCC-1 initial financing statement filing fee: $5.00. A blanket UCC-1 on all business assets is common; confirm the collateral description matches what the borrower actually intends to pledge.
Pursue minority-owned or women-owned business certification where applicable
Optional / parallel days after startingTexas Comptroller of Public Accounts administered the Historically Underutilized Business (HUB) Program for minority-, women-, and service-disabled-veteran-owned business certification for state procurement. NOTE: As of October 28, 2025, the Acting Texas Comptroller froze issuance of new and renewed HUB certifications pending program review. Under emergency rules announced December 2, 2025, the HUB program was restructured: businesses owned by people of color and women are being removed and the program renamed to 'Veteran Heroes United in Business' (VetHUB), with certification limited to service-disabled veterans. The certification track runs through a different Texas agency than the loan, but the two tracks frequently appear in the same diligence packet because procurement contracts strengthen the cash-flow story.
Sign and fund
Final step days after startingAt a Texas small-business loan closing, the note, security agreement, and personal guaranty are signed together, the UCC-1 is filed against the pledged collateral, and the funds are released against the agreed disbursement schedule.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Assemble the SBA application file | Standard contents include the borrower's last two to three years of tax returns, interim financials, a written use-of-funds plan, and the SBA borrower information forms (1919 for the 7(a) program; 1244 for the 504 program). The active SBA District Office for Texas is the six SBA District Offices serving Texas (Dallas / Fort Worth, El Paso, Houston, Lower Rio Grande Valley, San Antonio, and West Texas). | - | Before applying |
| Engage Texas has four regional SBDC networks: North Texas SBDC (ntsbdc.org), Northwest Texas SBDC (nwtsbdc.org),. | SBDC advisors look at the financial projections, the use-of-funds story, and the lender-fit question so the borrower walks in with a packet that has already been stress-tested. | - | Before applying |
| Verify the rate is lawful under Texas usury rules | Texas Finance Code default maximum interest rate is 10% per year unless otherwise provided by law (Tex. Fin. Code § 302.001). Optional rate ceilings under Chapter 303 raise this to 18% per year for many commercial loans (Tex. Fin. Code § 303.009). For commercial loans the actuarial method governs the maximum-rate calculation (Tex. Fin. Code § 306.004). The Texas Supreme Court has clarified that maximum commercial-loan interest must be calculated using the actuarial method on the declining principal balance. Where the rate exceeds the cap, the loan must rely on a statutory exemption (most commonly the bank-lender or licensed-finance-lender exemption). | - | Before closing |
| Review the personal-guaranty addendum line by line | Tex. Fam. Code § 3.202(c) The scope of the guaranty, the events that trip recourse, and any spousal-joinder requirement should be understood before signing, because guaranty enforcement is governed by state contract law. | personal-guarantee | Before signing |
| Review the UCC-1 filing | Texas Secretary of State, UCC Section. Effective post-August 29, 2025, all UCC filings must be submitted online through the SOS Portal (paper filings no longer accepted). UCC-1 initial financing statement filing fee: $5.00. A blanket UCC-1 on all business assets is common; confirm the collateral description matches what the borrower actually intends to pledge. | - | Before signing |
| Pursue minority-owned or women-owned business certification where applicable | Texas Comptroller of Public Accounts administered the Historically Underutilized Business (HUB) Program for minority-, women-, and service-disabled-veteran-owned business certification for state procurement. NOTE: As of October 28, 2025, the Acting Texas Comptroller froze issuance of new and renewed HUB certifications pending program review. Under emergency rules announced December 2, 2025, the HUB program was restructured: businesses owned by people of color and women are being removed and the program renamed to 'Veteran Heroes United in Business' (VetHUB), with certification limited to service-disabled veterans. The certification track runs through a different Texas agency than the loan, but the two tracks frequently appear in the same diligence packet because procurement contracts strengthen the cash-flow story. | - | Optional / parallel |
| Sign and fund | At a Texas small-business loan closing, the note, security agreement, and personal guaranty are signed together, the UCC-1 is filed against the pledged collateral, and the funds are released against the agreed disbursement schedule. | loan-agreement | Final step |
Frequently Asked Questions
Most Texas small-business loans require a personal guaranty from each principal owner. The federal SBA rule sets the floor at 20% ownership; lenders often apply tighter rules. Tex. Fam. Code § 3.202(c) Negotiate scope and any spousal-signature requirement up front.
The 7(a), 504, and Microloan programs all reach Texas borrowers. the six SBA District Offices serving Texas (Dallas / Fort Worth, El Paso, Houston, Lower Rio Grande Valley, San Antonio, and West Texas) is the District Office of record and publishes the active preferred-lender list. Texas has four regional SBDC networks: North Texas SBDC (ntsbdc.org), Northwest Texas SBDC (nwtsbdc.org), South-West Texas SBDC (txsbdc.org), and Texas Gulf Coast SBDC (sbdcnetwork.uh.edu) provides no-charge advising on the financial projections and loan-packet narrative that lenders expect to see.
The certification's value is procurement access. Certified MBE and WBE firms in Texas are eligible for state-contracting set-asides and are surfaced through state supplier-diversity sourcing platforms. Texas Comptroller of Public Accounts administered the Historically Underutilized Business (HUB) Program for minority-, women-, and service-disabled-veteran-owned business certification for state procurement. NOTE: As of October 28, 2025, the Acting Texas Comptroller froze issuance of new and renewed HUB certifications pending program review. Under emergency rules announced December 2, 2025, the HUB program was restructured: businesses owned by people of color and women are being removed and the program renamed to 'Veteran Heroes United in Business' (VetHUB), with certification limited to service-disabled veterans. The benefit is on the revenue line, not on the loan terms themselves.
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