TEXAS PRODUCT DEVELOPMENT AND SMALL BUSINESS INCUBATOR LOAN FUND

Category: State

The Product Development and Small Business Incubator Fund (PDSBI) offers long-term, asset-backed loans to product development companies and small business incubators/accelerators located in Texas. The loans finance the development and production of new or improved products or the stimulations of new or existing small businesses in Texas. The program targets those businesses which may be unable to obtain full financing or financing on workable terms in traditional capital markets.

The program consists of two separate funds – Product Development and Small Business Incubator – outlined below:

All applicants must have 3 years of operating history to be eligible for a loan.

  PRODUCT DEVELOPMENT FUND PRODUCT DEVELOPMENT FUND
PURPOSE To aid in the development and production, including the commercialization, of new or improved products in the State of Texas. To foster and stimulate the development of new or existing small businesses in the State of Texas.
ELIGIBILITY

A new or improved product being developed, produced, and/or commercialized in the State of Texas, to include an invention, device, technique, or process, without regard to whether a patent has been or could be granted, that has advanced beyond the theoretical stage and has or is readily capable of having a commercial application.

Pure research is ineligible.

A small business, defined as a legal entity which is domiciled in the State of Texas or has at least 51% of its employees located in the state, employs fewer than 100 full-time employees, and is independently owned and operated.

Any business in the State of Texas is eligible if the business is substantially likely to develop and expand the opportunities for small businesses in the state (for example, small business incubators) in the preferred industries listed below.

FINANCING AVAILABLE Asset-backed loans  
PRINCIPAL LIMITATIONS Based on staff and board discretion; generally range from $1 million - $5 million  
INTEREST RATE Low variable IR  
MAXIMUM TERM 15 years if financing personal property or working capital; 20 years for real property  
SECURITY REQUIREMENT

Unencumbered tangible assets including property, plant and equipment; generally, minimum 1:1 Orderly Liquidated Value to Loan Amount (first lien required)

 
GUARANTORS Third parties may serve as guarantors  
USE OF FUNDS Capital purchases or working capital infusions  
ADVANTAGES

Flexible structure and terms, below-market interest rates

 
CREDIT COVENANTS
  1. At least 3 years of audited annual financial statements
  2. Max debt-to-equity ratio of 4:1 after incorporation of requested loan
  3. Min current ratio of 1:1 after incorporation of requested loan, AND
  4. Min debt service coverage factor of 1.2x after incorporation of requested loan
 
PREFERRED INDUSTRIES Semiconductor, nanotechnology, biotechnology, or biomedicine products or businesses with the greatest likelihood of commercial success, job creation and retention in the state.
*Other products and businesses are eligible for consideration if approved by OOG/EDF
 

Contacts

Product Development and Small Business Incubator Fund Team
Governor's Office
Phone: (512) 936-0100
Visit Website

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