Product Development and Small Business Incubator Fund

The Product Development and Small Business Incubator Fund offers long-term, asset-backed loans to near-bankable businesses commercializing new or improved products and small businesses or entities which foster growth of small businesses. The program targets those businesses which may be unable to obtain full financing or financing on workable terms in traditional capital markets.

Who Can Apply?

Near-bankable businesses commercializing new or improved products in the state, small businesses, small business incubators and accelerators, and other entities which promote the development and expansion of small businesses in the areas of semiconductors, nanotechnology, biotechnology, or biomedicine. Products in the research and development phase are ineligible for funding. Applicants must have at least 3 years of operating history and at least 1 year of revenue history.

Type of Incentive

Long-term, asset-backed loans fully secured by tangible assets, not to exceed $5 million. Interest rates on all loans are variable and generally below-market, comprised of a low weekly variable rate plus a risk premium determined by the Governor’s Office. Loan terms are capped based on use of funds, but are ultimately determined by staff in consultation with individual applicants. Loans can be flexibly structured based on the unique needs of applicants.

Eligibility Details

  1. Small businesses applying under the Small Business Incubator Fund must be domiciled in the State of Texas or have at least 51% of their employees located in the state, employ fewer than 100 full-time employees, and, if for-profit, be independently owned and operated.
  2. Loans must be fully secured by unencumbered tangible assets at a maximum Loan-to-Orderly Liquidated Value ratio of 1:1.
  3. Loans must be used for capital purchases or working capital infusions.
  4. Applicants must meet certain financial ratios.
  5. Preference is given to those businesses with the greatest likelihood of commercial success, job creation and job retention in the state.
  6. Third parties may serve as guarantors.

Program Overview


This rolling application process is further detailed by the image below: