Financing

  • Financing

    Finding the Money to Fund a Promising Project: The Governor's Economic Development Office Can Help You Explore Your Opportunities

    Texas is committed to providing and facilitating funding for companies and communities with expansion and relocation projects in the state. Asset-based loans for companies, leveraged loans to communities and tax-exempt bond financing are just a few means of obtaining the capital necessary for a successful project.

    The Texas Product Development and Small Business Incubator Fund, collectively PDSBI, is a revolving loan program financed through original bond issuances. The primary objective of the program is to aid in the development, production and commercialization of new or improved products and to foster and stimulate small business in the state. The fund provides asset-based lending with flexible loan terms, competitive Loan-to-Value (LTV) and interest rates. Loan proceeds can be used for a broad range of capital and operating expenditures. Your company can secure loans with property, plant and equipment which can be amortized over the life of the asset. Communities or individual investors can assist as Guarantors.

    To be eligible, applicants must have at least 3 years of operating history and have unencumbered assets available for collateral. Preference for funding is given to the state's defined industry clusters including, but not limited to: nanotechnology, biotechnology, biomedicine, renewable energy, agriculture and aerospace. Texas is interested in creating and retaining high-quality jobs. For more information, contact the Economic Development Finance (EDF) department within the Governor's Economic Development & Tourism Office. The EDF administers the Texas Product/Business Fund at the direction of the Governor's appointed nine member board.

    The Texas Leverage Fund (TLF) provides a source of financing to communities that have adopted an economic development sales tax. Communities may leverage future sales tax revenues to expand economic development through business expansions, business recruitment and exporting. Awarding loans from $25,000 to $5 million, the TLF is available for interim, long-term or gap financing. TLF loans provide flexible financing terms to match the unique needs of communities. The funds are low-cost loans, providing capital to communities at floating Prime Rate, as published in the Wall Street Journal

    Generally, economic development corporations are eligible to borrow up to $5 million. Future sales tax revenues serve as collateral for loan repayment with required debt service coverage ratios specified in the Texas Leverage Fund Program Guidelines. Pledged tax collections not needed for actual debt service are available for other projects. Loan proceeds must be used to pay eligible "costs" of "projects" as defined by the amended Development Corporation Act of 1979. Under the Act, examples of eligible projects include land, buildings, machinery and equipment for manufacturing and industrial operations as well as sports, athletic, entertainment and public park purposes and events.

    For more information and/or to request an application packet, please contact the Governor's Economic Development Finance department at (512) 936-0100.

    The State of Texas Industrial Revenue Bond Program (IRB) provides tax-exempt or taxable financing for eligible industrial or manufacturing projects as defined in the Development Corporation Act of 1979. The Act allows cities, counties, and conservation and reclamation districts to form non-profit industrial development corporations (IDCs) or authorities on their behalf to provide bond financing for projects within their jurisdictions. The IDC issues bonds to finance the capital costs for an industrial or manufacturing business.

    Generally, the bond debt service is paid by the business under the terms of a lease, sale or loan agreement. As such, it does not constitute a debt or obligation of the sponsoring governmental unit, the IDC or the State of Texas. Small issue bonds are limited to manufacturing facilities. The bond amount cannot exceed $10 million and the total capital expenditure limitation for the project is $20 million. Exempt facility bonds can be issued to finance facilities for the furnishing of water, sewage and solid waste disposal facilities, electric energy or gas production facilities, local district heating or cooling facilities and qualified hazardous waste facilities. Other exempt facility bonds can be issued to finance airports, dock and wharf facilities, mass commuting facilities and high-speed inter-rail facilities. These facilities must be government owned, but they can be leased or operated by management contractors. 

    Businesses interested in applying for an industrial revenue bond should contact the local industrial development corporation as well as legal counsel specializing in the issuance of municipal bonds who will submit application materials on the business' behalf. The Industrial Revenue Bond Program is administered through the Office of the Governor, Economic Development Finance. For more information, please contact the Economic Development Finance department within the Governor's Economic Development & Tourism Office at (512) 936-0100.

    The Texas Military Value Revolving Loan Fund (TMVRLF) assists defense communities in enhancing the military value of a military facility in their area. The TMVRLF can help defense communities develop job-creating projects that minimize the negative effects of a defense base realignment or closure decision that occurred in 2005 or later. The fund can loan funds to help defense communities construct infrastructure to accommodate new or expanded military missions resulting from a base realignment and closure decision that occurred in 2005 or later. 

    The Revolving Loan Fund provides a low-cost source of financing to eligible defense communities who meet the application criteria. The minimum amount of a loan is $1 million, while the maximum amount of a loan is determined by the availability of funds. The amount of financing that can be provided is also dependent upon the creditworthiness of the applicant. The State may loan up to 100 percent of the cost of the described project. The Texas Military Value Revolving Loan Fund program is administered by the Texas Military Preparedness Commission. For additional information regarding the program, visit the following page or contact the Texas Military Preparedness Commission. 

    A Certified Capital Company (CAPCO) is a private government-sponsored venture capital company formed to increase the availability of growth capital for small businesses located in Texas. The program is also intended to stimulate job creation in Texas by requiring supported businesses to have at least 80 percent of payroll/manpower located within Texas. It's one way small businesses in Texas receive venture capital. 

    To be eligible, the business must be headquartered in Texas (or relocate to Texas within 90 days of the CAPCO's first investment); the business can have no more than 100 employees at the time of investment; 80 percent of payroll/workforce must be located within Texas; the primary business activity may be manufacturing, processing or product assembly, research and development or tangible services. The business may not be primarily engaged in retail sales, real estate development, insurance, banking, leasing, lending or professional services. By statute, a percentage of the CAPCO investments must be used for early stage businesses and businesses located in strategic investment areas. Get more information about CAPCO and the application process.

    The Capital Access Program was established to increase the availability of financing for businesses and nonprofit organizations that face barriers in accessing capital or fall outside the guidelines of conventional lending.  To begin the process, the borrower must apply for a loan with a participating lender (listed below) with terms established between the borrower and the lender.

    Use of proceeds may include working capital or the purchase, construction, or lease of capital assets, which include buildings and equipment. Construction or purchase of residential housing and simple real estate investments (excluding those occupied by the applicant’s business), are ineligible uses of capital access proceeds.

    To be eligible, a borrower must be:

    • A small or medium-sized business(499 employees or less);
    • A nonprofit organization; or
    • Domiciled in this state or having at least 51% of its employees located in this state

    For more information download and review the following documents: CAP Program Summary and CAP FAQ Sheet. You may also contact a participating lender listed below or call the Office of the Governor's Economic Development Finance department at (512) 936-0100.

    Capital Access Program Participating Lenders

    LiftFund 
    2007 W. Martin St.   
    San Antonio, Texas 78207 
    Office: (888) 215-2373
    Email: info@liftfund.com
    www.liftfund.com               

    PeopleFund
    2921 E. 17th Street, Bldg. D, Suite 100
    Austin, Texas 78702 
    Office (512) 472-8087
    Fax (512) 472-8191
    www.peoplefund.org

    Download an overview of Texas business incentives and programs available through the Governor's Economic Development Office.