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HBDi works to assist small companies in overcoming the biggest challenge of any start-up or emerging business, access to capital. Through several special loan funds, eligible small businesses throughout Houston are able to access affordable financing with flexible repayment terms for their start-up and business expansion needs.
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How does an HBDi loan differ from a bank loan?

As a nonprofit corporation, HBDi lending activities are subsidized with government funding. As a result, we are able to offer below market rates of interest that are fixed over the life of the loan. HBDi also offers very flexible terms (e.g., collateral coverage, loan to value, amortization, etc.) and credit terms that typically are not [...]

What are the fees associated with getting a loan?

Fees consist of an application fee of $75 for Micro-Enterprise loans, $200 for Small Business loans, and a 1% origination fee respectively. Fast Track loans require a $350.00 fee, which is refundable if the loan is not approved. Micro-enterprise and Small Business loans will incur legal fees and closing costs, which may range from $350 [...]

How long does it take to receive funding?

From the date of application to actual funding, if a loan application is thorough and complete, the process can take from 7-20 days for  Small Business loans. Fast Track loans are processed within three (3) business days. This post is also available in: Spanish

How important is my credit history?

HBDi reviews the borrower’s credit report and credit score in considering all loan requests. Fast Track Loan applicants must have a minimum score of 640 to be eligible for consideration. However, overall we are generally more flexible in reviewing credit history and in some cases are able to extend loans even when credit scores are [...]

What kind of businesses are ineligible to apply?

Ineligible businesses include sexually oriented businesses, gambling establishments, businesses with over 51% of revenues generated from liquor sales, businesses organized for religious purposes, residential builders and speculative real estate investments. This post is also available in: Spanish

What are ineligible uses of loan proceeds?

HBDi loan funds cannot be used for refinancing debt, investments, residential properties, or speculative real estate. This post is also available in: Spanish

Are there any geographical boundaries?

Yes. In order to be eligible for an HBDi loan, a business must be located in the Houston metropolitan area. Additionally, all Fast Track loan applicants must be located in a low-income census tract with 51% or more low-income residents. This post is also available in: Spanish

What assets can be used to secure a loan?

HBDi will accept most unencumbered business and personal assets including real estate, equipment, furniture, inventory, accounts receivable, investment property, marketable securities, etc. This post is also available in: Spanish

Can loans be prepaid?

HBDi micro and small business loans can be repaid without penalty. Fast Track loans, if repaid within the first year of the loan term, carry a prepayment penalty of 10.25% of the outstanding loan balance. After one year, Fast Track loans can be paid without penalty. This post is also available in: Spanish

Do you require personal guaranties?

Any principal of the company (an individual with 20% or more ownership) is required to guarantee the loan. This post is also available in: Spanish

Do you assist start-up businesses?

Yes.  Start-up businesses (with fewer than 12 months of operating history) must provide a detailed business plan, inject 15-33% of capital into the business, have relevant industry and management experience, and have sufficient cashflow and collateral to support the loan request. This post is also available in: Spanish

What is a Tandem Loan?

A Tandem Loan is an HBDi loan made in conjunction with a matching loan from a commercial lending institution.  Typically HBDi  funds only a portion of the debt capital (up to 50%) that a borrower may require and a bank provides the balance. The borrower must have a bank commitment for the balance of the required [...]

Should I apply for a Tandem Loan with the bank or HBDi?

You can originate your request with the bank of your choice or directly with HBDi. Typically, however, your application to HBDi will follow after your request with a bank.  Our tandem loan is designed to provide gap financing in instances where a commercial lender is not able to provide the total amount of capital you [...]

When must the jobs be created?

A business obtaining an HBDi loan has two (2) years from the date of funding to create the required number of jobs. The borrower’s progress in meeting the job creation requirement will be monitored annually and documented by the completion of the appropriate forms. This post is also available in: Spanish

Does HBDi provide grants?

HBDi is a non-bank lending institution and although we are government funded we do not provide grants. Generally, government grants are not available to for-profit businesses. Non profits may be eligible for grants through various governmental agencies, corporations and foundations. This post is also available in: Spanish

What kinds of loans are available?

  • Fast Track Loan: $5,000 - $25,000 - Need financial assistance in a hurry? Based largely on credit scores (minimum score of 600), the Fast Track Loan can be processed and funded within 3 business days with minimal application requirements, i.e., no financial statements, tax returns, etc. Management and technical assistance is also provided in conjunction with the loan.
  • Micro-Enterprise Loan: $5,000 to $50,000. For start-ups and businesses in the early stages of development that have not been able to obtain credit from conventional lenders.
  • Small Business Tandem Loans: $50,000 to $250,000. A Tandem Loan is designed to assist expanding businesses by bridging the gap between commercial bank financing and other funding sources. Depending upon the project size, matching bank financing may be required.

How can loan proceeds be used?

Loan proceeds can be used for a variety of business purposes including:

  • Working Capital
  • Business Acquisition
  • Equipment, Furniture and Fixtures
  • Land and Building

What are the loan terms, interest rates and fees?

  • Terms can range from 1 to 30 years depending upon the useful life of the asset being financed. Typical terms are 1-5 years for working capital, 3-10 years for equipment and up to 25 years for real estate.
  • Fixed, below-market rates (as low as 5%) are available. Interest rates are determined on a case-by-case basis.
  • Application fees are: $350 - Fast Track Loan, $75 – Micro-Enterprise Loan, and $250 - Tandem Loans. Micro and Tandem Loans will also incur a 1% origination fee and attorney fees for closing documents which typically may range from $400 - $650.

What are the eligibility requirements?

  • Must be a legally established for profit or non-profit business located in Houston
  • Satisfactory credit history and personal character
  • Sound financial position and reasonable personal support for the project
  • Reasonable assurance of repayment, based on past and projected earnings
  • Must be able to meet job creation goals for Micro and Tandem loans (one (1) job per $35,000)
  • Minimum credit score of 600 is required for Fast Track applicants and the business must be located in a low-income neighborhood
Certain types of businesses, e.g., adult entertainment, selling alcoholic beverages, etc., are ineligible to participate in the loan programs. Consult your HBD representative for further information.

How can I apply for a loan?

Persons interested in applying for an HBD loan may submit an online application or print a copy of the application format and submit it and all supporting documents to HBD in person. Documents required for preliminary consideration for the Micro and Tandem Loans include:

  • Sources and uses of funds detailing the proposed loan request
  • 3 years of fiscal year-end financial statements
  • Current interim financial statement (not more than 3 months old)
  • Personal financial statements and resumes for principals owning 20% or more of the business
  • Summary of company debt obligations including current balance, origination and maturity dates, and monthly payments
  • Listing of unencumbered assets that can be pledged as collateral
  • Narrative description on the background of the business (i.e., location, market, management team, purpose for loan, etc.)

This post is also available in: Spanish