The Texas Enterprise Fund (TEF) is the state’s flagship deal-closing fund, administered by the Office of the Governor. It exists to attract and retain major employers by offering financial incentives to companies making expansion or relocation decisions where Texas is competing directly against other states. Since its creation by the Texas Legislature in 2003, TEF has awarded hundreds of millions of dollars to companies that committed to creating thousands of jobs across the state.
What the Texas Enterprise Fund Actually Is
TEF is a discretionary grant program, meaning there is no entitlement formula. The Governor’s office evaluates each project individually based on the economic impact it would bring to Texas. Awards are tied to performance agreements that require the company to meet specific job creation and capital investment milestones. If the company fails to meet those milestones, it must repay a portion of the award, often referred to as a clawback provision.
This is not a small business grant in the traditional sense. TEF targets large-scale projects that typically involve hundreds of new jobs and millions in capital investment. However, mid-market companies making significant expansion decisions have also received awards, especially when competing against incentive offers from other states.
Eligibility Requirements
TEF does not publish a rigid eligibility checklist. Instead, the Governor’s office considers several factors when evaluating applications:
- Competitive situation: The project must involve a genuine competition between Texas and at least one other state or country. TEF is designed as a deal-closer, not a general incentive.
- Job creation: The company must commit to creating a specific number of new, full-time jobs in Texas. Most successful applications involve commitments of 75 or more new positions.
- Capital investment: A significant investment in facilities, equipment, or infrastructure in the state is typically expected.
- Wages: Proposed wages should meet or exceed the prevailing wage for the county where the project will be located.
- Community support: Local economic development organizations and elected officials usually need to provide supporting documentation and a local incentive match.
The Application Process Step by Step
Step 1: Engage Your Local Economic Development Organization
TEF applications do not come directly from the company. They are submitted through a local economic development corporation (EDC), city, or county economic development office. Your first step is to contact the EDC in the community where you plan to locate or expand. They will help structure the local incentive package and prepare the TEF submission.
Step 2: Prepare the Project Details
The application requires a detailed project description, including the number of jobs to be created, average wages, capital investment amount, project timeline, and a clear explanation of the competitive dynamic. You need to demonstrate that without the TEF award, the project would likely go to another state.
Step 3: Local Incentive Package
TEF expects the local community to contribute its own incentive package, which can include property tax abatements, infrastructure improvements, land grants, or other support. The state wants to see that the local government is also invested in the project’s success.
Step 4: Submit Through the Governor’s Office
The local EDC submits the formal TEF application to the Governor’s Economic Development and Tourism Division. The application is reviewed by the Governor’s staff, and the Governor must approve the award along with the Lieutenant Governor and the Speaker of the House.
Step 5: Due Diligence and Agreement
If the project is approved in principle, the state conducts due diligence on the company, including financial review. A performance agreement is negotiated specifying the exact commitments. Awards are typically disbursed over time as the company meets milestones.
What Makes a Strong TEF Application
Based on historical TEF awards, the strongest applications share several characteristics: a genuine competitive offer from another state, a large number of high-wage jobs, a significant capital investment, strong local support, and a project in an industry sector that the state considers strategic, such as advanced manufacturing, technology, aerospace and defense, life sciences, or energy.
Common Misconceptions
TEF is not a general business grant. It will not fund a startup looking for seed capital or a small business seeking working capital. It is a deal-closing tool for projects of significant economic magnitude.
TEF is not guaranteed. Even companies that meet all the criteria may not receive an award. The fund is limited and applications are evaluated competitively.
TEF awards come with strings. Performance agreements include clawback provisions. If the company does not meet its job creation and investment commitments, it must return some or all of the award.
Alternative Programs Worth Exploring
If your project does not meet the scale required for TEF, Texas offers several other incentive programs. The Skills Development Fund provides workforce training grants to employers of all sizes. Local property tax abatements through Chapter 312 and Chapter 313 agreements can reduce costs significantly. The Texas manufacturing sales tax exemption eliminates state sales tax on manufacturing equipment.
Next Steps
The Texas Enterprise Fund is one piece of a much larger incentive landscape. Whether your project is large enough for TEF or better suited to other programs, understanding your full range of options is the first step. Our screening report checks your business against 150+ verified Texas programs, including grants, tax credits, loans, and incentives, and shows you which ones may match. Start your free screening →