State guide · Lines of credit
Business Line of Credit in Texas: How It Works, Requirements and Where to Apply
Texas has about 3.5 million small businesses, and a line of credit is one of the most common ways they cover the gap between paying for payroll, inventory and materials and getting paid. This guide explains how a business line of credit works for Texas owners in 2026, the types of lines available, what lenders require, what a line costs compared with a loan, the Texas rules that apply and how to apply once for several offers.
How Do You Get a Business Line of Credit in Texas?
Most Texas businesses that qualify for a line of credit have 12+ months in business, $20,000+ in monthly deposits, a 650+ credit score and the last 3 months of business bank statements. Online lines run $20,000 to $2 million and open in 2 to 3 days; you draw what you need, pay only on the balance you use, and the credit becomes available again as you repay. Bank and SBA lines cost less but take weeks and ask for tax returns and financial statements. One application through RAN Funding reaches the line-of-credit lenders in our network that fit your file.
How a Business Line of Credit Works in Texas
A line of credit gives your business a set limit you can draw against whenever you need cash, instead of one lump sum. You pay only on what you have drawn, and each repayment frees that amount up to use again.
- Draw. Move part of the limit to your business bank account, usually within a day or two on an online line once it is open.
- Repay. Each draw is repaid on a set schedule, often weekly or monthly, over a fixed number of weeks or months.
- Reuse. As you repay, the available credit goes back up, so the same line covers the next gap without a new application.
- Renew. Most lines are reviewed every 12 months; a good repayment record is how limits grow.
Illustration of a revolving line in Texas; draw sizes and repayment schedules vary by lender.
Types of Business Lines of Credit in Texas
| Line type | Limit | Repayment | Time to open | Best for |
|---|---|---|---|---|
| Online revolving line | $20K – $2M | Each draw repaid weekly or monthly | 2 – 3 days | Recurring cash-flow gaps |
| Bank line of credit | Set by the bank | Monthly; reviewed yearly | 2 – 6 weeks | Profitable businesses with 2+ years of returns |
| SBA 7(a) Working Capital Pilot line | Up to $5M | Up to 60 months | 30 – 90 days | Large contracts, receivables and inventory |
| Asset-based line | Based on receivables or inventory | Revolves as customers pay | 1 – 3 weeks | B2B companies with steady invoices |
| Business credit card | Usually smaller | Monthly statement | Days | Small, everyday purchases |
Typical structures in 2026. The lender sets the final limit, cost and terms.
Business Line of Credit Requirements in Texas
What lenders ask for depends on the type of line:
| Line type | Time in business | Credit | Revenue | Main documents |
|---|---|---|---|---|
| Online revolving line | 12+ months | 650+ (600+ on some programs) | $20,000+ a month | Last 3 months of bank statements |
| Bank line of credit | 2+ years | Usually 680+ | Varies by bank | Tax returns, financial statements, collateral |
| SBA line | 2+ years | Good personal credit | $250,000+ a year | Tax returns, SBA forms, contracts or receivables |
| Asset-based line | 12+ months | Flexible | B2B receivables | A/R aging, invoices, bank statements |
See also unsecured business lines of credit and lines of credit with bad credit.
What a Line of Credit Costs Compared With a Loan
The main saving comes from paying only for what you use. Draw $40,000 for an eight-week gap and pay it back, and you pay for eight weeks on $40,000, not a year on a $100,000 loan you did not fully need. When you compare offers, ask for each of these in writing:
- The cost of each draw, as a rate or a fixed fee, and how many weeks or months each draw is repaid over.
- Draw, maintenance or inactivity fees, and any fee to open or renew the line.
- Payment frequency. Weekly payments suit businesses with steady deposits; monthly payments are easier on lumpy cash flow.
- Renewal and limit increases, and what happens if the lender reduces or closes the line.
Use our business line of credit calculator to compare payments before you apply.
Line of Credit, Term Loan or Working Capital Loan?
- Choose a line of credit for repeating, unpredictable needs: payroll before receivables come in, seasonal inventory, repairs.
- Choose a term loan for one known cost such as an expansion or a large purchase, with a fixed payment over up to 3 years.
- Choose a working capital loan when you need cash in 24 to 48 hours or your credit is below what line lenders accept.
Many Texas owners keep a line open as a reserve and use a term loan for planned projects.
Texas Rules for Business Lines of Credit
Texas regulates one kind of business financing specifically: commercial sales-based financing, under House Bill 700 (Chapter 398 of the Texas Finance Code), in effect since September 1, 2025. A traditional revolving line of credit is not sales-based financing, so it is governed by its contract and by general Texas and federal law.
- If a product sold as a line of credit is repaid from a share of your sales, ask whether it is sales-based financing; if it is, the provider must give signed written disclosures before closing.
- Providers and brokers of sales-based financing must register with the Texas Office of Consumer Credit Commissioner by December 31, 2026.
- For any line, get the cost of each draw, every fee and the repayment schedule in writing before you sign.
Who Uses Lines of Credit in Texas
Small businesses employ about 5.1 million people in Texas, roughly 44% of the state’s private-sector employees, according to the SBA Office of Advocacy. These industries employ the most and lean on lines of credit for recurring gaps:
- Health care practices. Payroll and supplies while insurance claims are paid.
- Restaurants and food service. Inventory, repairs and payroll through slow weeks and seasons.
- Construction and contractors. Materials and crews between progress payments and retainage.
- Professional services. Payroll while clients pay on 30- to 60-day terms.
- Retail. Inventory ahead of the holidays and other peak seasons.
How to Apply for a Business Line of Credit in Texas
- Gather your documents. The last 3 months of business bank statements, a government ID and your business’s EIN; tax returns for bank and SBA lines.
- Apply once. About five minutes, with a soft credit check only.
- A specialist reviews your file the same day and matches it to the line-of-credit lenders in our network whose criteria fit.
- Compare offers on limit, cost per draw, fees and repayment schedule.
- Open the line and draw when you need it; most online lines open in 2 to 3 days.
Common Questions
What credit score do I need for a business line of credit in Texas?
Most online lines in our network look for a 650+ personal credit score (600+ on some programs), 12+ months in business and $20,000+ in monthly deposits. Bank lines usually want 680+ and two years of tax returns. Below 600, a working capital loan or a line secured by receivables is usually the better route.
How much can a Texas business get on a line of credit?
Lines through our network run $20,000 to $2 million, sized mainly on your monthly deposits; most first lines land between $25,000 and $250,000 and grow with on-time repayment. SBA 7(a) Working Capital Pilot lines go up to $5 million for larger, well-documented businesses.
How fast can I open a business line of credit in Texas?
Online lines usually get a decision within hours of a complete file and open in 2 to 3 days, with the first draw in 48 to 72 hours once approved. Bank lines take several weeks, and SBA lines 30 to 90 days.
Do I need collateral for a business line of credit?
Most online lines are unsecured in the sense that they do not require specific collateral, but they usually include a personal guarantee and a general lien (UCC filing) on business assets. Bank and SBA lines may require collateral, and asset-based lines are secured by your receivables or inventory.
Does Texas regulate business lines of credit?
Texas House Bill 700, in effect since September 1, 2025, covers commercial sales-based financing such as merchant cash advances, not traditional lines of credit. A true revolving line is governed by its contract and general Texas and federal law; if a line is repaid from a share of your sales, ask whether it is sales-based financing, which requires signed disclosures under Chapter 398 of the Finance Code.
Is RAN Funding a lender?
No. RAN Funding is a business financing broker. One application reaches the line-of-credit lenders in our network that fit your file, a specialist compares the offers with you, and the lender you choose sets the limit, rate and terms.
Sources
- Texas 2025 Small Business Profile — U.S. Small Business Administration, Office of Advocacy
- 7(a) loans, including the Working Capital Pilot — U.S. Small Business Administration
- HB 700 bill analysis (89th Legislature) — Texas Legislature Online
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist reads your statements the same day and tells you which products fit, what each costs and how fast it funds.
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