Texas Small Business Credit Initiative

Texas administers two programs under the Texas Small Business Credit Initiative (TSBCI): a Capital Access Program (CAP) and a Loan Guarantee Program (LGP), which are open to eligible new and existing Texas businesses with 499 or fewer employees. These programs assist small business growth and create new jobs through increased access to small business funding. TSBCI programs will assist all small businesses, but will focus on traditionally marginalized and those that have been impacted by the COVID-19 pandemic. Eligible businesses must also be for-profit organizations, domiciled in Texas, and have a minimum of 51% of their employees currently located in Texas.

The CAP supports small businesses by working with financial institutions including banks, credit unions, and community development financial (CDFI’s), to offer small business loans. To encourage lenders to make loans to small businesses that struggle to access capital, the CAP provides matching portfolio insurance premium payments to a loan loss reserve (LLR) account created for each participating financial institution, reducing the lender’s portfolio risk. Loans of $5,000 up to $5 million may be enrolled in the CAP. Both the lender and the borrower must make matching premium payments of up to 3.5% of the loan principal to the LLR account. The State will match the combined amount the borrower and the lender contributed to the LLR.

The LGP supports small businesses by working with financial institutions to offer small business loan guarantees. The LGP provides guarantees of up to 80% of unpaid principal on enrolled loans. By providing loan guarantees, the program provides financial institutions the additional assurance needed to extend loans to small business that otherwise face challenges in accessing capital. Loans of $5,000 up to $20 million may be enrolled in the LGP. Loan guarantees may be up to 80%, but no higher than $4 million. Interest rate and qualifications will be determined by each participating lender.

TSBCI is administered by the Economic Development Finance Division of the Texas Economic Development and Tourism Office, within the Office of the Governor, on behalf of the U.S. Department of the Treasury. Businesses do not apply directly to the TSBCI program for a loan, instead, they contact their preferred financial institution or a registered participating institution.