The Texas Playbook for Small Business Grants & Incentive Programs

Texas small business grants and incentive programs vary widely by company size, location, hiring plans, training needs, and investment level. Some programs are true grants, while others are loan-support tools, workforce training programs, tax refunds, or federal tax credits that may apply to Texas-based companies.

This guide explains five programs small business owners, founders, and site selectors may encounter when researching Texas business incentive programs:

1. The Texas Enterprise Fund
2. Texas Small Business Credit Initiative
3. Skills for Small Business
4. Texas Enterprise Zone Program
5. The federal R&D tax credit payroll offset

Remember, it’s just a starting point, not legal, tax, or eligibility advice.

Texas Enterprise Fund: Cash Grants for Job Creation

The Texas Enterprise Fund (TEF) is one of the state’s major deal-closing tools as it provides cash grants for projects with:

• Significant job creation
• Capital investment
• Active competition between a Texas site and at least one viable out-of-state location

For small businesses, the key question is scale. TEF is usually not the best fit for very small companies with modest hiring plans. It is instead designed for competitive relocation or expansion projects that create meaningful full-time jobs and bring major capital investment to Texas, meaning it may be best suited for:

• Expansion or relocation projects
• Companies creating significant full-time jobs
• Businesses making major capital investments
• Competitive site selection projects

Small businesses should not assume TEF applies simply because they are growing. Project scale, competition, capital investment, job creation, and program review all matter. Companies exploring Texas business incentives should evaluate TEF alongside other tools.

Texas Small Business Credit Initiative: Expanding Access to Capital

The Texas Small Business Credit Initiative (TSBCI) is designed to expand access to small business financing through approved participating financial institutions. Rather than providing a direct grant to business owners, the credit helps reduce lender risk so more eligible small businesses can access capital.

Texas administers TSBCI through several financing tools, including:

• Capital Access Program, for loans of $5,000 up to $5 million
• Loan Guarantee Program, for loans of $5,000 to $20 million

Eligible small businesses generally include very small businesses with fewer than 10 employees and small businesses with fewer than 500 employees that are also:

• For-profit organizations
• Domiciled in Texas
• Have at least 51% of employees located in Texas

TSBCI may be best suited for Texas-based small businesses seeking capital, startups and existing companies that can work through an approved lender, and businesses that may not fit large-scale grant programs.

Skills for Small Business: Funded Employee Training

The Skills for Small Business program is administered by the Texas Workforce Commission and helps small employers pay for training through local public community and technical colleges.

It’s a workforce training program, not a general operating grant, meaning it can help small businesses:

• Upskill current employees
• Train new workers
• Fund approved community college coursework
• Build job-relevant skills for specific roles

Skills for Small Business may be best suited for employers that are hiring, training employees, or trying to reduce training costs through approved education partners. It is especially relevant for companies that need technical, operational, or industry-specific training but may not have the internal resources to build a large training program on their own.

Texas Enterprise Zone Program: Incentives for Distressed Areas

The Texas Enterprise Zone Program is a state sales and use tax refund program designed to encourage private investment and job creation in economically distressed areas.

Unlike some programs, businesses do not simply self-designate for the Texas Enterprise Zone Program. Instead, Texas communities must nominate companies in their jurisdiction for an Enterprise Zone designation and submit the application on the company’s behalf.

Core eligibility concepts include:

• Minimum capital investment thresholds
• Job creation and/or retention
• Hiring or retaining economically disadvantaged individuals, enterprise zone residents, or veterans

Refund levels depend on capital investment, jobs, and project designation category.

This program may be best suited for businesses locating or expanding in qualifying areas, projects with clear hiring and investment plans, and companies working closely with local economic development partners across Texas economic development regions.

R&D Tax Credit Payroll Offset for Startups

The federal research and development (R&D) tax credit payroll offset can help qualified small businesses apply part of the research credit against payroll taxes instead of only income taxes.

The Inflation Reduction Act increased the qualified small business payroll tax credit election amount from $250,000 to $500,000 for tax years beginning after Dec. 31, 2022, per the IRS. The credit is claimed using Form 6765 and reported on Form 8974.

This is a federal tax tool, not a Texas-specific incentive, but it may be highly relevant to Texas startups in software, biotech, manufacturing, engineering, energy, and product development with:

• Qualified research activity
• Payroll tax liability
• Investment product, process, software, or technology development
• Businesses should consult qualified tax professionals before claiming R&D credits.

How Small Businesses Can Get Started

The best incentive path starts with the business need:

• If you need training support, review Skills for Small Business
• If you need capital, explore TSBCI through participating lenders
• If you are creating many jobs and comparing sites, review TEF
• If your project is in a distressed area, explore the Enterprise Zone Program with local officials
• If you are doing technical R&D, ask a tax professional about the R&D payroll offset

Before asking about small business incentives in Texas, companies should document hiring plans, capital investment, location, workforce training needs, revenue stage, R&D activity, and timeline. Eligibility, funding, deadlines, and federal authorizations can change, so businesses should verify current program requirements before making financial decisions.

Finding the Right Texas Incentive Starts With the Right Question

There are many reasons to bring business to Texas, from Texas’ economic strength to its growing workforce and beyond. TxEDC helps businesses understand Texas’ advantages and connect with appropriate state and regional resources.

For project-specific incentives, financing, relocation, and expansion questions, businesses should work directly with The Office of the Governor’s Texas Economic Development & Tourism Office or the administering agency.

Contact TxEDC to learn how Texas’ business environment can support your next stage of growth.