Funding Resources for Small Business

Texas is known as a favorable climate for business based in part on our comparatively low tax burden (we know from surveys that it definitely does not feel low to most of you) and favorable regulatory environment. Surprisingly, costs for some of the basics business needs like real estate, energy, wages, and taxes are lower in Texas than in the rest of the country. In 2018, these costs were 2% below the national average! Austin has more than 54,000 businesses with less than 100 employees, as recorded in the 2019 census. This impressive count may be due in part to the amazing resources available to local businesses in Austin. As every business owner knows, funding is one of the most important pieces of a solid business plan. Except for the independently wealthy among us, we all need funding to start a new business or to grow an existing one. Below is a brief outline of some of the funding resources available to Austin businesses.

ACCION Texas is a financial support system for small businesses that advances racial, gender, and economic justice for all.  They are a nonprofit organization that provides credit to small businesses with at least 12 months in business, $50,000 or more in annual sales, owner of at least 20% of the business, owner at least 18 years or older.

Bank loans are obvious place to look for funding for a new business is to your bank. Some small local banks are more willing to work with new business owners and have non-traditional programs. Even with some banks working hard to support small business, it can still be very hard to qualify for bank loans.

BCL of Texas supports Texans to acquire wealth-building assets, such as home ownership and entrepreneurship, with the financial tools and education necessary to build personal net worth. They are a U.S. Treasury Certified Development Financial Institution (CDFI), a U.S. Small Business Administration Certified Development Corporation (CDC), and a HUD-certified housing counseling agency. They offer loans of $5,000 to $50,000 for small businesses.

Business Investment Growth, BiGAUSTIN is certified by the U.S. Department of Treasury as a Community Development Financial Institution (CDFI). They operate as a nonprofit providing training and loans to small businesses, especially minority- and women-owned businesses, in Central Texas. They lend up to $15,000 to start-ups and up to $50,000 for established businesses and have 1 – 6 year payback terms.

Capital CDC is a private, non-profit provider of small business financing throughout Texas, New Mexico, and Arkansas offering SBA 504 loans for fixed assets such as land or buildings. Additionally, they offer a Community Advantage Loan Program as a companion loan to assist small businesses in “under served” markets with the financing of working capital.

Family Business Loan Program is a public-private partnership between the City of Austin, HUD, and participating private lenders to offer low-interest loans to qualified small businesses that are expanding and creating jobs. They offer low interest rates, flexible repayment terms, and low equity requirements.

LiftFund provides credit and services to small businesses and entrepreneurs who do not have access to loans from commercial sources through direct capital including SBA microloans, SBA Community Advantage, SBA 504 Loans, EDA Loans in a 14-state footprint.

PeopleFund is a nonprofit organization, a U.S. Treasury certified Community Development Financial Institution (CDFI) and a SBA certified lender. Lends up to $250,000 to Texas businesses that do not qualify for bank loans and provide complimentary client business assistance and education.

Small Business Investment Company (SBIC) are privately owned and managed investment firms that use their own capital, plus funds borrowed at favorable rates with an SBA guarantee, to make venture capital investments in small businesses. They are licensed and regulated by the SBA.

Texas Venture Capital and Private Equity Directory provides investment firm profiles and financing frequently updated. This directory serves local entrepreneurs looking to raise capital, investors who wish to network with other investors and service providers who need a directory of investment firms.

U.S. Small Business Administration (SBA) operates a number of programs designed to assist small businesses access financing from lending institutions. You must go through the normal application process for an SBA loan. As a large government funding operation, they have many resources to offer.

Veteran Business Initiative is a public private partnership between the City of Austin in conjunction with the U.S. Department of Housing and Urban Development, which offers a low-interest rate loan and low borrower equity requirements to help create or expand a business. They offer low interest rates, flexible repayment terms, and low equity requirements.

Austin Enters Stage 4 COVID-19

Austin and Travis County have entered stage 4 of the Austin Public Health risk guidelines as Covid-19 case numbers and hospitalizations continue their recent rapid increase. This move comes just on the heels of the move to stage 3 a week ago. Officials are asking everyone to wear masks indoors, even if they’re partially or fully vaccinated.

These stage 4 guidelines include asking vaccinated residents to wear masks at private indoor gatherings and at outdoor gatherings if social distancing is not possible and masking while traveling, dining and shopping. Unvaccinated or partially vaccinated residents should avoid private indoor and outdoor gatherings, and travel, dine and shop only if it is essential (with masks).

Advice for protecting your employees and your customers can be found here from the City of Austin’s Covid-19 Economic Recovery site: https://www.austintexas.gov/economicrecovery.

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Austin Moves to Stage 3 Covid-19 Risk Level

On Thursday, July 15th, Austin city officials moved from Stage 2 to Stage 3 covid-19 risk based guidelines due to a rise in new cases, which doubled, and hospitalizations, which neared 20, in the preceding days. This move reflects the City’s stated goals to follow science and data to guide risk level decisions. No new recommendations for businesses were included in the announcement of this move. As a reminder, stage 3 recommendations include the following:  fully vaccinated individuals can participate in indoor and outdoor private gatherings and dine and shop without masking (if allowed by the business) and can travel with masking; partially vaccinated or unvaccinated low-risk individuals can participate in indoor and outdoor private gatherings, dine, shop, and travel with masking; and partially vaccinated or unvaccinated high-risk individuals should avoid non-essential indoor and outdoor private gatherings, dining, shopping, and travel. 

The guidelines are careful to note that “everyone should continue to follow any additional requirements of local businesses, venues, and schools regardless of vaccination status or stage,” which reinforces a business owner’s right to require masks if they choose. Reasons to continue to require masks include a desire to protect customers and employees who may not be eligible for vaccination and to help prevent the spread of the disease to children who do not yet have the ability to receive a Covid-10 vaccine. We published an editable flyer for business owners to use should they decide to continue to require masks. Request a copy here.

Questions about how to modify your operations? Issues with implementing or eliminating mask requirements with employees or customers? Ideas for best practices that you’d like to share? We are here for all of it – reach out at hello@ibuyaustin.com.

Austin Live Music Preservation Fund Open

Good news for live music venues in danger of closing: the City of Austin Economic Development Department has opened applications for emergency relief grants from the Austin Live Music Preservation Fund, for which $5 million was mobilized through the Save Austin’s Vital Economic Sectors (SAVES) resolution, originally announced in September. The funds will be administered by The Long Center For The Performing Arts.

Eligible live music venues must be located in a City of Austin Council District and must meet or exceed the City’s COVID-19 safety guidelines. For those in immediate danger of closing, $20k grants will be available this month, with up to $140k in additional funding (up to $40k monthly) available for those who qualify. Legal and accounting services, real estate advice and guidance on lease negotiations, and other professional services and long-term planning from community experts will also be available to venues receiving emergency funding.

For eligibility guidelines and application, visit www.thelongcenter.org/saveaustinvenues. For questions and application assistance, contact the Long Center by email at saveaustinvenues@thelongcenter.org or by phone 512-457-5181.

Applications close Monday, January 11, 2021 at 5 p.m.

Travis County Small Business Grant Program Open

Travis County’s grant program for small business (using CARES Act funding) is open for pre-application eligibility screening. BCL of Texas is partnering with TravisCounty to launch the Travis County (TCTX) Thrive Small Business Program to offer grants of up to $40,000 to qualifying businesses in Travis County but outside of Austin city limits that have been financially impacted by the coronavirus pandemic. Businesses will need to complete a pre-application to determine if they’re eligible for the program. If eligible, businesses will be invited to submit a full application. If awarded, the businesses who participate in TCTX Thrive Small Business Program will work with BCL’s small business coaches to create a Business Continuity Plan and will receive no-cost business coaching throughout the program period.

The Travis County Commissioners Court approved funding for this new small business grant program due to the unprecedented impact of COVID-19. Businesses must submit the Pre-Application Eligibility Determination before July 3rd in order to participate in this program. Eligible Businesses must meet the following criteria:

  • Businesses located and headquartered within Travis County and further, located in unincorporated Travis County, in any city’s extraterritorial jurisdiction (ETJ), or in another city or village within the county outside the City of Austin incorporated limits.
  • The business address identified on legal documents is used to determine the location of the business.
  • Have no outstanding tax liens or legal judgments. If on a payment plan, must be current. Exceptions may be made for businesses that have outstanding recent quarter 941s or sales tax reports to the Texas Comptroller due to financial difficulties related to COVID-19.
  • Have been in business since March 1, 2019
  • Fewer than 25 Full Time Equivalent Employees on March 1, 2020
  • Maximum net revenue of $500,000 annually
  • Businesses that use a Social Security Number, Employer Identification Number, or Individual Taxpayer Identification Number

They have a dedicated team available to respond to questions. For more information, you can call at 512-994-2280 or email us at info@traviscountythrive.com.

 

City Council Approved Grant Funding for Austin’s Small Businesses

Good news: federal funding from the CARES (Coronavirus Aid, Relief, and Economic Security) Act is coming to Austin in the form of grants for small business! After some discussion a revised spending framework was approved by City Council in early June. AIBA advocated for keeping the original amount of $23M on the grounds that small business in Austin is a huge economic generator (employing more than 300,000 people at more than 40,000 small businesses) and can work to get/keep our local economy healthy in these trying times. We also put out a call for stories from locals and want to thank council members and business owners who advocated for keeping original amount. Actions taken at the June 4th meeting can be found here.

$105.5 million will be devoted to “Emergency Response and Management,” which includes $68 million for department operating expenses, while $62.9 million will go to “Medical and Public Health Needs,” which includes protection of vulnerable populations, testing, planning and research, shelters, quarantine facilities, and more. $103.2 million will go to “Economic Support,” which includes direct financial support and food and rent assistance to individuals, as well as support for small businesses, non-profits, the creative sector, childcare providers, worker and customer safety, workforce development, and technical assistance. Of this $103.2 million, funding for “Financial and Other Direct Support” was increased by $12 million from the original proposal for a new total of $27.5 million (which does not include food, rent, or utility bill assistance.) Funding for the creative sector was decreased from $8.5 to $5 million, and funding for non-profits was decreased from $7 million to $6.35 million.

We are disappointed to report that the originally proposed $25.5 million for small business funding was reduced by $9 million to $16.5 million. As we reported in earlier newsletters, this funding will provide small business grants of up to $40,000 each. In addition, there will be $1 million available for commercial rent assistance. As soon as details are available about eligibility requirements and application details, we will post them. Please consider joining us on Tuesday mornings at 9:30 for quick updates. You can RSVP here to get meeting details. You can begin to prepare your application documentation now by taking a few deep breaths and gathering your financials and incorporation paperwork. Be ready when applications open!

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