The U.S. Department of Housing and Urban Development primarily funds housing and community development, but several HUD programs directly benefit Texas businesses. The most significant is the Community Development Block Grant (CDBG) program, which provides flexible funding to cities and counties that can be used for business assistance, infrastructure supporting economic development, and microenterprise programs.
Community Development Block Grants (CDBG)
CDBG is HUD's largest and most flexible community development program. Texas receives CDBG funds through two channels:
- Entitlement grants: Large cities and urban counties receive annual CDBG allocations directly from HUD. Houston, Dallas, San Antonio, Austin, Fort Worth, El Paso, and other entitlement cities each administer their own CDBG programs.
- State CDBG: The Texas Department of Agriculture administers the state CDBG program for non-entitlement areas — smaller cities and rural counties. This includes the Texas Capital Fund, which provides CDBG money specifically for economic development.
How CDBG Benefits Texas Businesses
- Business loans and grants: Cities can use CDBG funds for direct loans or grants to businesses, typically requiring job creation for low- and moderate-income individuals
- Infrastructure improvements: Street, water, sewer, and other infrastructure projects that support business development
- Microenterprise assistance: Technical assistance, training, and small loans for businesses with five or fewer employees
- Commercial rehabilitation: Funds for improving commercial buildings in eligible areas
- Facade improvement programs: Many Texas cities operate CDBG-funded facade improvement programs for businesses in designated areas
Texas Capital Fund
The Texas Capital Fund is the state-administered economic development component of Texas CDBG. It provides:
- Infrastructure Finance Program: Grants to non-entitlement cities for public infrastructure directly related to business development, with job creation requirements
- Real Estate Development Program: Funding for real estate improvements that support business expansion and job creation
- Main Street Program: Technical assistance and organizational support for downtown revitalization
Section 108 Loan Guarantees
Section 108 allows CDBG entitlement communities to borrow against their future CDBG allocations for larger economic development projects. Texas cities have used Section 108 for:
- Commercial and industrial development
- Business incubator and innovation center construction
- Mixed-use development projects
- Large-scale infrastructure supporting economic development
Opportunity Zones
While technically a Treasury/IRS program, Opportunity Zones were designated using HUD-provided census tract data. Texas has hundreds of designated Opportunity Zones. Businesses in these zones may attract investment from Qualified Opportunity Funds, which receive capital gains tax benefits for investing in designated areas.
HUD-Funded Counseling and Technical Assistance
- Housing counseling agencies: Some HUD-funded agencies provide financial literacy and business-related counseling
- Fair housing compliance: Businesses in housing and real estate must comply with fair housing requirements — HUD provides training and technical assistance
How to Access HUD Business Programs in Texas
- Contact your city's community development department: Each CDBG entitlement city runs its own programs with different priorities and application processes
- Check with TDA: For non-entitlement areas, the Texas Department of Agriculture administers the Texas Capital Fund
- Ask about microenterprise programs: Many cities dedicate a portion of CDBG funds to microenterprise assistance for businesses with five or fewer employees
- Check Opportunity Zone status: Verify whether your business location is in a designated Opportunity Zone
Bottom Line
HUD programs are often overlooked by Texas business owners because HUD is associated with housing. However, CDBG-funded business programs, the Texas Capital Fund, Section 108 financing, and Opportunity Zone incentives create meaningful opportunities for businesses that meet location and job creation criteria.
Our screening report checks your business against HUD-related programs and 150+ other verified opportunities. Start your free screening →