By: Alvarado, Blanco, Johnson  S.B. No. 1361          (In the Senate - Filed February 18, 2025; March 6, 2025,   read first time and referred to Committee on Business & Commerce;   May 9, 2025, reported adversely, with favorable Committee   Substitute by the following vote:  Yeas 11, Nays 0; May 9, 2025,   sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 1361 By:  Nichols     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.     * * * * *