Relating to a disaster recovery loan program for small and micro-businesses.

89(R) SB 1361 - House Committee Report version - Bill Text

By: Alvarado, et al.

S.B. No. 1361

(Button)

A BILL TO BE ENTITLED

AN ACT

relating to a disaster recovery loan program for small and

micro-businesses.

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

(8) to read as follows:

(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

program.

(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

full-time employees.

SECTION 3. The heading to Section 481.452, Government Code,

is amended to read as follows:

Sec. 481.452.
SMALL- AND
MICRO-BUSINESS RECOVERY FUND.

SECTION 4. Section 481.452(a), Government Code, is amended

to read as follows:

(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,

is amended to read as follows:

Sec. 481.453. POWERS OF BANK IN ADMINISTERING
SMALL- AND

MICRO-BUSINESS RECOVERY FUND.

SECTION 6. Section 481.454(b), Government Code, is amended

to read as follows:

(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

Subchapter BB.

SECTION 7. Section 481.455, Government Code, is amended to

read as follows:

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

following a declared disaster.

(a-1)

The bank may not provide loans to micro-businesses

under this chapter in an amount less than 50 percent of the total

amount of all loans provided under the program in a fiscal biennium.

(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

that:

(A) is in good standing under the laws of this

state; [
and
]

(B) did not owe delinquent taxes to a taxing unit

of this state before the date of the initial issuance of the

disaster declaration;

(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

under this subchapter;

(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

Code;

(B) is a franchise;

(C) is a national chain with operations in this

state;

(D) is a lobbying firm; or

(E) is a private equity firm or backed by a

private equity firm;

(3)

may not have an interest rate higher than the

prevailing rate for a similar loan in this state;
and

(4)
[
(3)
] must meet any other criteria provided by

this subchapter.

(c) Payments on
small- and
micro-business disaster recovery

loans shall be made directly to the lending community development

financial institutions.

(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

institution.

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

to read as follows:

(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

recovery loans;

(3) the default rate on existing disaster recovery

loans; and

(4) any other information the bank requires.

SECTION 10. Section 489.107(c), Government Code, is amended

to read as follows:

(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

fiscal year.

SECTION 11. Subchapter EE, Chapter 481, Government Code, is

repealed.

SECTION 12. This Act takes effect September 1, 2025.