The Texas Enterprise Fund (TEF) is one of the largest state-level economic development incentive funds in the country. Created by the Texas Legislature, the TEF is designed to be a deal-closing fund — a financial incentive that the Governor can offer to businesses when Texas is competing with other states for a significant job-creation project.
This guide explains how the Texas Enterprise Fund works, what the published eligibility criteria are, how the application process works, and what businesses should know before pursuing a TEF award.
What Is the Texas Enterprise Fund?
The TEF is a cash grant funded by the Texas Legislature and administered by the Governor's Office through the Texas Economic Development and Tourism Office. Unlike tax credits or loans, TEF awards are direct cash grants to businesses. The fund has awarded hundreds of millions of dollars since its creation, supporting projects that created tens of thousands of jobs across Texas.
TEF awards are performance-based, meaning businesses must meet agreed-upon job creation and capital investment milestones to receive and retain the funding. If a business fails to meet its contractual obligations, it may be required to return some or all of the award.
Published Eligibility Criteria
Based on published program guidelines, the following factors are considered in TEF applications:
- Competitive situation: The project must involve a genuine competitive site selection where Texas is competing against at least one other state or country for the project.
- Job creation: The project must create a significant number of new jobs in Texas. While there is no published minimum, most TEF awards have been associated with projects creating 50 or more jobs.
- Capital investment: The business must make a meaningful capital investment in Texas. This typically involves facility construction, equipment, or infrastructure investment.
- Wages: Jobs created should offer competitive wages, generally at or above the prevailing county wage for the project location.
- Community support: TEF applications typically require a local community match — financial incentives or support from the city, county, or local economic development corporation where the project will locate.
- Industry sector: While the TEF is not limited to specific industries, projects in advanced manufacturing, technology, life sciences, corporate headquarters, and other high-impact sectors tend to be strong candidates.
How the Application Process Works
Step 1: Community Engagement
TEF applications typically begin with the business engaging a local economic development organization — a city EDC, county, or regional economic development partnership. The local entity helps assemble the incentive package and coordinates the TEF application with the Governor's Office.
Step 2: Application Submission
The application is submitted to the Texas Economic Development and Tourism Office. It includes project details, job creation and capital investment projections, competitive situation documentation, and the local community's proposed match.
Step 3: Due Diligence
The Governor's Office conducts due diligence on the applicant, including financial review, background checks, and verification of the competitive situation. Staff may request additional information or clarification during this process.
Step 4: Legislative Notification
Before a TEF award is finalized, the Governor must notify the Lieutenant Governor and the Speaker of the House. Both must approve the award for it to proceed. This legislative oversight mechanism ensures transparency and accountability.
Step 5: Contract Execution
If approved, the business enters a performance agreement with the state. The agreement specifies the award amount, job creation milestones, wage requirements, capital investment commitments, and clawback provisions. Award payments are typically tied to the business meeting specific milestones over time.
Award Amounts
TEF award amounts vary widely depending on the size and impact of the project. Awards have ranged from hundreds of thousands to tens of millions of dollars. The per-job amount varies based on the project's expected economic impact, wage levels, industry sector, and competitive dynamics.
Clawback Provisions
TEF agreements include clawback provisions that require businesses to return funding if they fail to meet contractual obligations. If a business does not create the required number of jobs, does not meet wage requirements, or does not make the committed capital investment, the state can require partial or full repayment of the award. This performance-based structure protects taxpayer investment.
Layering TEF with Other Programs
TEF awards are often part of a larger incentive package. Businesses receiving TEF awards frequently also access:
- Local property tax abatements: City or county abatements that reduce property tax burden during the initial investment period. Property tax abatement guide.
- Chapter 380/381 agreements: City or county economic development agreements providing additional incentives. Chapter 380 guide.
- Skills Development Fund: Workforce training grants to support hiring and training at the new facility. Skills Development Fund guide.
- Enterprise Zone designations: State sales and use tax refunds tied to job creation in economically distressed areas.
What Small Businesses Should Know
The Texas Enterprise Fund is primarily designed for large-scale projects — typically those involving substantial job creation and capital investment. Most small businesses will not be competitive for TEF awards. However, understanding the TEF is useful for several reasons:
- Businesses planning significant expansions that will create dozens or hundreds of jobs should explore TEF early in the site selection process.
- Local economic development organizations can advise on whether a project may be TEF-competitive.
- Small businesses can benefit indirectly from TEF projects through supply chain opportunities and increased local economic activity.
Find Programs That May Fit Your Business
The TEF is just one of many Texas programs. Even if your business is not a TEF candidate, you may be eligible for Skills Development Fund training grants, HUB procurement preferences, property tax abatements, SBA loans, or other programs designed for businesses of all sizes.
Not sure which programs may fit your business? 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 →