Texas businesses seeking funding in 2026 have more options than most realize. Between government grants, tax credits, government-backed loans, and local incentive programs, the landscape spans federal, state, and local sources. This guide provides a comprehensive overview of every major category of business funding available in Texas in 2026.
Government Grants
Grants are direct funding awards that do not require repayment. They are the most sought-after form of government funding but also the most competitive.
Federal Grants
- SBIR/STTR: R&D grants from 11 federal agencies. Phase I awards range from $50,000 to $275,000. Phase II awards can reach $1 million or more.
- USDA Rural Business Development Grants: For businesses in communities under 50,000 population. Covers training, technical assistance, and equipment.
- EDA Grants: Economic Development Administration infrastructure and planning grants, typically through regional development organizations.
- REAP: USDA Rural Energy for America Program grants for renewable energy and energy efficiency projects.
State Grants
- Texas Enterprise Fund: Deal-closing fund for major job creation and capital investment projects.
- Skills Development Fund: Workforce training grants through community college partnerships.
- CPRIT: Cancer research and commercialization grants for life sciences companies.
- Texas Capital Fund: Infrastructure grants for businesses in rural communities.
See our detailed guide to Texas small business grants in 2026.
Tax Credits and Exemptions
Tax incentives reduce your tax burden rather than providing direct funding, but the financial impact can be substantial.
- Texas Franchise Tax R&D Credit: Credit against franchise tax for qualified research activities.
- Manufacturing Sales Tax Exemption: Equipment used in manufacturing is exempt from Texas sales tax.
- Federal R&D Tax Credit: Credits for qualified research expenditures on federal income taxes.
- Work Opportunity Tax Credit: Federal credit for hiring from targeted groups.
- Enterprise Zone Refunds: Sales tax refunds for job creation in economically distressed areas.
- Clean Energy Credits: Investment and production tax credits for renewable energy projects.
See our complete guide to Texas business tax credits.
Government-Backed Loans
Government-backed loans are not grants — they must be repaid — but they offer better terms than conventional loans, including lower interest rates, longer repayment periods, and lower down payments.
- SBA 7(a): Up to $5 million for working capital, equipment, and real estate.
- SBA 504: Long-term fixed-rate financing for major assets.
- SBA Microloans: Up to $50,000 through nonprofit intermediary lenders.
- TSBCI: Texas Small Business Credit Initiative capital access programs.
- USDA B&I Guarantees: Loan guarantees for businesses in rural communities.
- CDFI Lending: Community Development Financial Institutions serving underserved markets.
See our guide to Texas government-backed loans.
Local Incentive Programs
Texas cities and counties administer their own incentive programs, which can be layered on top of state and federal benefits.
- Property tax abatements under Chapter 312
- Tax Increment Reinvestment Zones (TIRZ)
- Public Improvement Districts (PIDs)
- City-level small business grants and M/WBE programs
- Economic development corporation incentive packages
Procurement Preferences
Certification programs provide contracting advantages that function as indirect funding sources:
- Texas HUB: State procurement preferences
- SBA 8(a): Federal contracting preferences
- HUBZone: Federal contracting preferences for businesses in designated zones
- City M/WBE: Local contracting preferences
- SDVOSB: Service-Disabled Veteran-Owned Small Business federal preferences
Building a Layered Funding Strategy
The most effective approach to Texas business funding is layering multiple programs. A manufacturing business, for example, might combine:
- A Skills Development Fund grant for workforce training
- The manufacturing sales tax exemption on equipment purchases
- A local property tax abatement on facility improvements
- An SBA 504 loan for the building acquisition
- The federal R&D tax credit for product development activities
Each program addresses a different cost center, and none conflict with the others.
Find Programs That May Fit Your Business
With programs spread across dozens of agencies at the federal, state, and local level, identifying the right combination takes significant research. Our free screening report checks your business against 150+ verified programs — grants, tax credits, loans, and incentives — and shows you which ones may match. Start your free screening →