Find the Best Small Business Loans in Waco, TX

How to get a business loan in Waco

McLennan County’s population is expected to grow 22.4 percent by 2040, creating an environment for more businesses to thrive in Waco. If you are starting or expanding a company, taking out a business loan provides the capital needed to succeed.

Companies in Waco may need a small business loan to:

• Purchase real estate
• Buy or lease new equipment
• Increase working capital
• Purchase inventory
• Expand marketing initiatives

Obtaining a business loan is not difficult if you know what to expect. Before applying for a business loan, make sure you meet the general requirements. Lenders typically look at six different areas when determining if a company qualifies for a loan.

Typical requirements for business loans in Waco

Factor	Requirements
Credit	600+
Collateral	Necessary for certain types of loans
Amount of debt	Low debt-to-income ratio (50% or lower)
Cash flow	Reliable stream of income
Age of business	2+ years
Industry	Year-round business (not seasonal)

You may be eligible for a business loan even if you do not meet one or two of these requirements. Each lender qualifies borrowers based on different requirements, and not all lenders focus on the same areas.

Types of business loans in Waco

There are many types of business loans available for Waco residents, and choosing the right loan requires considering the use of the funds and your company’s needs and assets. Some of the most common types of loans in Waco include:

• Business lines of credit are similar to credit cards. They allow businesses to access funding up to a specified amount and only pay interest on the amount used.
• Invoice financing provides a short-term loan for companies who need a small amount of cash quickly. The company’s outstanding invoices secure the loan.
• Merchant cash advances give a company cash upfront that is repaid by withholding a certain percentage of the company’s daily credit and debit card sales.
• Equipment loans are used to purchase any equipment required by the company. These loans may require a down payment, and the purchased equipment secures the loan as collateral.

These loans are available from banks, credit unions and online lenders. Your lending institution can go over your business’s needs as well as the institution's requirements and help decide which loan is correct for you.

SBA and online business loans

Other options for small business owners in Waco include SBA loans, which are backed by the U.S. Small Business Administration, and term loans from alternate, online lenders and lending brokers.

Small Business Administration loan

The U.S. Small Business Administration (SBA) works with third-party lenders to provide small to large loans to small businesses by partially agreeing to back up the borrowing business (sometimes up to 85 percent) if it fails to repay the loan.

Each lender sets its own eligibility requirements, but typically you must have additional requirements to qualify for an SBA loan, including:

• Be for-profit
• Have a physical location in the U.S.
• Have personal invested equity
• Have no other funds/debts from other lenders

Most SBAs also charge a guarantee fee on loans greater than $150,000. This fee runs between 0.25 and 3.5 percent of the loan, depending on your terms.

Online/traditional business loan

Some online business lenders fund loans directly, while others help match business owners with individual investors and lenders to find the best loan rates. With an online business loan, you can also choose whether you want a short- or long-term loan.

Online business loans have a more straightforward application process than SBA loans. Many alternate lenders weigh your company’s viability and business plan more heavily than credit history, which gives you an opportunity for a loan even if you have bad credit. Keep in mind that you’ll probably have a higher annual percentage rate (APR) if you have bad credit.

Many lending brokers have business consultants on staff to help you secure a loan. These advisors help you create a business plan to put your company in the best position to qualify for a loan and grow in the future.

SBA loans vs. online lenders

Type of loan	SBA	Online
APR	7% - 8%	8% - 30%
Payment schedule	Monthly	Monthly
Benefits	Better terms and conditions, more available capital	Easy application process, ability to comparison shop, convenient
Drawbacks	Extensive application process, lengthy turnaround time	Higher interest rates/fees

Not every loan or borrower is created equal. To find the right business loan for you, research and compare options from a variety of lenders. Read through each contract to fully understand the terms and what fees you might have to pay as well. Using all this information, you can find what’s right for you.