Texas has one of the largest and most dynamic labor markets in the United States, and staffing agencies play a critical role in connecting employers with workers across industries. Staffing agency owners in Texas may be eligible for workforce development grants, government contracting preferences, SBA financing, and tax incentives that can support business operations and growth.
This guide covers the most relevant programs and resources for staffing agency owners in Texas.
Workforce Development Programs
Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credit is one of the most directly relevant programs for staffing agencies. WOTC provides federal tax credits to employers — including staffing firms — that hire workers from designated target groups, including veterans, long-term unemployed individuals, SNAP recipients, and ex-offenders. Credits range from $1,200 to $9,600 per qualifying employee depending on the target group and hours worked. Staffing agencies that place large numbers of workers may generate significant WOTC credits.
Skills Development Fund
The Texas Workforce Commission's Skills Development Fund provides grants for customized workforce training. Staffing agencies can partner with local community colleges to access training funds for placed workers. Training in areas like manufacturing skills, healthcare certifications, IT fundamentals, warehouse operations, and customer service can improve placement quality and client retention rates while the state covers training costs.
WIOA Programs
The Workforce Innovation and Opportunity Act (WIOA) funds training and employment services through local workforce development boards. Staffing agencies that work with workforce boards to place WIOA participants can access training subsidies and placement incentives. On-the-job training (OJT) programs under WIOA can reimburse employers — including staffing agencies — for 50% to 75% of wages during a defined training period.
Government Contracting Opportunities
Texas HUB Certification
Staffing agencies owned by women, minorities, or service-disabled veterans may qualify for Texas HUB certification. State agencies, universities, and public entities regularly contract for temporary staffing, administrative support, IT staffing, and specialized personnel services. HUB certification provides procurement preferences that can help smaller staffing firms compete for these contracts.
SBA 8(a) Program
Staffing agencies owned by socially and economically disadvantaged individuals may qualify for the SBA's 8(a) Business Development program. Federal agencies are significant consumers of staffing services, and 8(a) certification provides access to sole-source and set-aside contracts that can represent major revenue opportunities for qualifying firms.
GSA Schedule Contracts
Staffing agencies that obtain a GSA Schedule contract can sell temporary and permanent staffing services to federal agencies on pre-negotiated terms. The GSA Professional Services Schedule includes categories for administrative, technical, healthcare, and IT staffing services. While obtaining a GSA Schedule requires an application process and demonstrated experience, it provides ongoing access to the federal marketplace.
SBA Lending Programs
Staffing agencies often need working capital to cover payroll before clients pay their invoices. SBA lending programs can help:
- SBA 7(a) loans: Up to $5 million for working capital, equipment, and business expansion. Working capital is particularly important for staffing agencies that must fund payroll cycles.
- SBA CAPLines: The SBA's CAPLines program provides revolving lines of credit for small businesses with short-term and cyclical working capital needs, which aligns well with the staffing industry's cash flow patterns.
- SBA Microloans: Up to $50,000 through community-based lenders, suitable for startup staffing agencies needing initial working capital.
Tax Incentives
- Work Opportunity Tax Credit: As noted above, WOTC can generate significant per-placement credits for staffing agencies hiring from target groups.
- Section 179 deduction: Immediately expense qualifying technology purchases including applicant tracking systems, computers, and office equipment.
- Employee Retention Credit eligibility: While the original ERC program has ended for most employers, staffing agencies should consult their tax advisor about any remaining eligibility for prior qualifying periods.
- R&D Tax Credit: Staffing agencies that develop proprietary technology — such as matching algorithms, applicant tracking systems, or workforce analytics platforms — may qualify for the federal R&D Tax Credit.
Local Programs
Texas cities and counties may offer additional resources for staffing agencies:
- City MBE/WBE programs: Houston, Dallas, Austin, San Antonio, and other major cities administer local certification programs that provide contracting preferences on city staffing contracts.
- Enterprise Zone benefits: Staffing agencies operating in designated Enterprise Zones may qualify for state sales tax refunds on certain purchases.
- Workforce board partnerships: Local workforce development boards may provide referral pipelines and training subsidies that reduce staffing agencies' recruitment and training costs.
Steps for Staffing Agency Owners in Texas
- Implement WOTC screening: Screen all new hires for WOTC eligibility to maximize tax credits on qualifying placements.
- Evaluate certification eligibility: Apply for HUB, 8(a), WOSB, or SDVOSB certification if you qualify, to access government staffing contracts.
- Partner with workforce boards: Build relationships with local workforce development boards for referrals, training subsidies, and OJT programs.
- Explore SBA financing: SBA 7(a) loans and CAPLines can address the working capital challenges common in the staffing industry.
- Register on SAM.gov: Active SAM registration is required for federal contracting, and the federal government is one of the largest consumers of staffing services.
Find Programs That May Fit Your Business
Staffing agencies in Texas can access a unique combination of workforce tax credits, government contracting preferences, training grants, and SBA financing. The staffing industry's central role in the Texas labor market creates multiple pathways for accessing public programs.
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