SB 1361

relating to the consolidation of the small business disaster
recovery loan program and the micro-business disaster recovery loan
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  The heading to Subchapter CC, Chapter 481,
Government Code, is amended to read as follows:
SUBCHAPTER CC. SMALL- AND MICRO-BUSINESS DISASTER RECOVERY PROGRAM
SECTION 2.  Section 481.451, Government Code, is amended by
amending Subdivisions (3), (4), (6), and (7) and adding Subdivision
(3)  "Default rate" means the percentage of small- and
micro-business disaster recovery loans made that did not meet the
payment terms during a period specified by the bank.
(4)  "Fund" means the small- and micro-business
recovery fund established under Section 481.452.
(6)  "Small- and micro-business [Micro-business]
disaster recovery loan" or "disaster recovery loan" means a loan
made by a participating community development financial
institution to small businesses or micro-businesses under the
(7)  "Program" means the small- and micro-business
disaster recovery loan program established under this subchapter.
(8)  "Small business" means a corporation,
partnership, sole proprietorship, or other legal entity that:
(A)  is domiciled in this state or has at least 51
percent of its employees located in this state;
(B)  is formed to make a profit;
(C)  is independently owned and operated; and
(D)  employs more than 20 and fewer than 100
SECTION 3.  The heading to Section 481.452, Government Code,
Sec. 481.452.  SMALL- AND MICRO-BUSINESS RECOVERY FUND.
SECTION 4.  Section 481.452(a), Government Code, is amended
(a)  The small- and micro-business recovery fund is a
dedicated account in the general revenue fund.
SECTION 5.  The heading to Section 481.453, Government Code,
Sec. 481.453.  POWERS OF BANK IN ADMINISTERING SMALL- AND
SECTION 6.  Section 481.454(b), Government Code, is amended
(b)  The program shall expand access to capital for
qualifying small businesses and micro-businesses to create jobs in
this state and constitutes a capital access program under
SECTION 7.  Section 481.455, Government Code, is amended to
Sec. 481.455.  PROGRAM ADMINISTRATION.  (a)  The bank, under
the program, shall provide zero interest loans to eligible
community development financial institutions for purposes of
making interest-bearing loans to qualifying small businesses and
micro-businesses that have difficulty in accessing capital
(b)  A loan made by an eligible community development
financial institution under the program:
(1)  must be made to a small business or micro-business
(A)  is in good standing under the laws of this
(B)  did not owe delinquent taxes to a taxing unit
of this state before the date of the initial issuance of the
(C)  has suffered physical or economic injury as
the result of the event leading to the disaster declaration; and
(D)  has paid in full any previous loan received
(2)  may not be made to a micro-business that:
(A)  has total revenue that exceeds the amount for
which no franchise tax is due under Section 171.002(d)(2), Tax
(C)  is a national chain with operations in this
(E)  is a private equity firm or backed by a
(3)  must meet any other criteria provided by this
(c)  Payments on small- and micro-business disaster recovery
loans shall be made directly to the lending community development
(d)  All income received on a loan made by a community
development financial institution participating in the program is
the property of the financial institution.  Income received on a
loan includes the payment of interest by a borrower small business
or micro-business and the administrative fees assessed by the
community development financial institution.
(e)  A community development financial institution
participating in the program shall make payments to the bank on the
zero interest loans borrowed by the financial institution under the
program quarterly, and the bank or this state is not responsible or
liable for any defaults in small- and micro-business disaster
recovery loans made by the community development financial
SECTION 8.  Subchapter CC, Chapter 481, Government Code, is
amended by adding Section 481.4555 to read as follows:
Sec. 481.4555.  USES OF LOAN.  An eligible small business or
micro-business may use a loan received under this subchapter to pay
the business's payroll costs, including costs related to the
continuation of health care benefits for the business's employees.
SECTION 9.  Section 481.457(a), Government Code, is amended
(a)  A community development financial institution
participating in the program shall report quarterly to the bank:
(1)  the names of small businesses and micro-businesses
that have received a disaster recovery loan;
(2)  the current balance of all outstanding disaster
(3)  the default rate on existing disaster recovery
(4)  any other information the bank requires.
SECTION 10.  Section 489.107(c), Government Code, is amended
(c)  For the small- and micro-business [small business]
disaster recovery loan program, the report must include a general
description of each small business and micro-business for which an
applicant was awarded a loan from the fund during the preceding
SECTION 11.  Subchapter EE, Chapter 481, Government Code, is
SECTION 12.  This Act takes effect September 1, 2025.