Texas Enterprise Fund, Texas Capital Fund and State Business Incentives
Texas Enterprise Fund, Texas Capital Fund and State Business Incentives
Searches for texas business incentives tend to turn up headlines about large companies closing deals with the state. For most small businesses, those headlines describe programs that were never built for them. The major state programs target projects that create dozens or hundreds of jobs, and most of them need a local partner. This guide explains what the Texas Enterprise Fund, the Texas Capital Fund, JETI and local agreements cover, who can realistically use them, and what a small business should do instead of waiting on a grant.
This guide is informational content, not legal or tax advice. Program rules, funding and deadlines change, so confirm every eligibility point and figure with the named agency before you rely on it. If an incentive is part of a real investment decision, talk with a qualified business attorney and a CPA.
Start with what Texas does not charge you for
Before you look at grants, it helps to know where the state stays out of your way. Texas is one of the lower-friction states for forming and running a business, and several requirements that cost money in other states do not exist here.
- Texas has no state income tax and no corporate income tax. Businesses pay the franchise tax instead, which the Texas Comptroller of Public Accounts administers.
- Texas does not issue or require a general state business license.
- There is no statewide general contractor license and no statewide roofing license.
- Counties license nothing. The only county filing most owners encounter is the assumed-name certificate that sole proprietors file with the county clerk.
- There is no publication requirement.
Two figures matter most for a new entity. A Certificate of Formation for an LLC costs $300 when filed with the Texas Secretary of State, and the Secretary of State does not require an annual report. Instead, every entity files a Public Information Report with the Comptroller each year, due May 15, alongside its franchise tax report. Entities with total revenue at or below the $2,650,000 no tax due threshold for the 2026 and 2027 report years owe no franchise tax, but they still have to file the Public Information Report. Confirm the threshold and filing requirements for each report year with the Comptroller, since those rules are set year by year.
Texas Enterprise Fund
The Texas Enterprise Fund is a deal-closing cash grant run through the Governor's Office. It exists to win projects that are choosing between a Texas site and an out-of-state option. The state uses it to close a decision that is still open, not to reward businesses that have already committed to Texas.
The program requires all of the following:
- More than 75 new full-time jobs for an urban project, or more than 25 for a rural project.
- Average wages at or above the county average for the term of the grant.
- Significant capital investment.
- Support from local government.
- No location decision made yet.
Treat that list as a filter. The last item is the one most businesses miss. If you have signed a lease, purchased property or publicly announced a site, you are unlikely to qualify, because the grant is designed to change a choice that has not been made. The job count is the other hurdle. A growing company adding 15 employees is not a candidate, and its budget should not assume one.
Texas Capital Fund
The Texas Capital Fund works differently. It is designed for communities, not individual businesses. It supports public infrastructure tied to business job creation, such as the water, sewer or road work a project needs in order to proceed. The eligible applicants are non-entitlement cities under 50,000 people and non-metro counties. Entitlement cities, which receive federal community development funds directly, are outside this program.
That structure means a small business does not apply on its own behalf. You work through your city or county, which has to make the application. The practical steps are:
- Confirm which government you are in and whether it is a non-entitlement city under 50,000 people or a non-metro county. The program's eligibility turns on these facts, so have your local office confirm your status before you plan around it.
- Bring your job numbers, planned investment and timeline to the city or county economic development office before you commit to a site.
- Ask directly whether your local government intends to apply and whether it would sponsor your project.
Ask about the current application cycle as well. The window for applying changes, and the state's rules govern it, so a city or county that missed one cycle may still have a chance at the next.
JETI: the Chapter 313 replacement
You will still see older articles about Chapter 313, the school-tax limitation program that large projects once used to reduce school district property taxes on new investment. That program has expired. Its replacement is JETI, created by HB 5 in 2023.
JETI gives qualifying projects a 10-year, 50 percent limitation on the appraised value used for school district maintenance and operations taxes. To qualify, a project must meet job and capital investment minimums that scale by county population. Applications go through the Texas Comptroller of Public Accounts.
JETI fits large projects, such as industrial plants and major facilities. It does not fit a typical small business. The minimums are set high enough that a company of normal size will not reach them, so do not build a budget around this program. If a project is large enough to consider it, confirm the current minimums and application timing with the Comptroller and have a qualified tax advisor model the result.
Local Chapter 380 and 381 agreements
For most businesses that receive any Texas incentive at all, the deal is local. Chapter 380 and Chapter 381 agreements are negotiated between a company and a city or county. Because they are negotiated, the amount, form and conditions depend on the deal and on the local government's priorities. Neither the state nor a standard schedule sets the terms.
Local governments usually expect something in return, typically a commitment to jobs, investment or other measurable results. Ask the economic development office what it will require, then look closely at what happens if you miss a target. Ask whether the agreement includes a clawback, which requires you to repay the incentive if you fail to meet your commitments.
Get every term in writing. Have an attorney review the agreement before you sign, and have your CPA confirm how any payment is treated for tax purposes.
How the programs compare
| Program | Who applies | Scale | Key requirement |
|---|---|---|---|
| Texas Enterprise Fund | The company, with local government support | More than 75 new full-time jobs (urban) or 25 (rural) | No location decision made yet |
| Texas Capital Fund | Non-entitlement cities under 50,000 and non-metro counties, on behalf of businesses | Public infrastructure tied to business job creation | Local government sponsorship |
| JETI | The company, through the Comptroller | Large projects; minimums scale by county population | 10-year, 50 percent school district maintenance and operations appraised-value limitation |
| Chapter 380 and 381 agreements | The company, negotiated with the city or county | Set locally | Commitments set in the agreement |
A practical sequence for a small business
- Size the project honestly. If you are not creating dozens of jobs or making a large capital investment, state programs will not fund your growth. Plan around your own capital, bank financing and federal Small Business Administration resources.
- Check your location status. If you have already committed to a site, the Texas Enterprise Fund is off the table. Ask local offices about the options that remain.
- Call your city or county. Ask whether it applies for Texas Capital Fund projects and what Chapter 380 or 381 agreements it offers.
- Get free advising. The Texas Small Business Development Center Network helps owners with business planning and financing. Confirm which services are available at your local center.
- Verify every number. Check the official agency page for any fee, threshold or deadline before you budget for it.
- Bring in professionals. An attorney reviews local agreements and any filing that creates obligations. A CPA models franchise tax, the Public Information Report and the effect of any grant on your taxes.
Official resources
- Texas Secretary of State, business formation and filings
- Texas Comptroller of Public Accounts, taxes and franchise tax
- Texas Small Business Development Center Network
- SBA Dallas Fort Worth district office, with other regional district offices listed on sba.gov
Bottom line
The Texas Enterprise Fund and Texas Capital Fund are real programs, but they are built for large projects and for communities, not for a typical small business. JETI is a school-tax tool for large investments. For most owners, the meaningful advantages are local agreements, the absence of a state income tax and general state licensing, and free advising from the SBDC network. Confirm every figure with the agency that administers it, and get professional review before you commit to any incentive.
Reminder: this is informational content, not legal or tax advice.