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Texas Micro-Business Disaster Recovery Loan Program

The Texas Micro-Business Disaster Recovery (MBDR) Loan Program was created during the 87th Legislative Session (House Bill 3271) and signed into law on June 18, 2021, by Governor Greg Abbott to facilitate loans from Community Development Financial Institutions (CDFIs) to micro-businesses affected by declared disasters.

Type of Financing

The Texas MBDR Loan Program will provide zero-interest loans to eligible CDFIs for purposes of making interest-bearing loans to qualifying micro-businesses that have difficulty in accessing capital following a declared disaster. All income received on a loan made by a CDFI participating in the program is the property of the financial institution. Income received on a loan includes the payment of interest by a borrower micro-business and the administrative fees assessed by the CDFI.

Available Funding: up to $5,000,000 (through August 31, 2025)

Who can Apply?

CDFIs are encouraged to apply to participate in the program now—before disaster strikes. Starting October 1, 2024, eligible CDFIs can apply to participate in the Texas MBDR Loan Program via the participation agreement, which can be obtained by emailing MBDR@gov.texas.gov. Eligible CDFIs must have received their CDFI Certification from the U.S. Department of Treasury and must be authorized to conduct business in the state of Texas.

Once a local, state or federal disaster has been declared, CDFIs may then apply to enroll loans from micro-businesses that meet the criteria below.

Eligibility Details for Micro-Businesses

"Micro-business" means a corporation, partnership, sole proprietorship or other legal entity that:

  • is domiciled in this state and has at least 95% of its employees located in this state;
  • is formed to make a profit; and
  • employs not more than 20 employees.

For micro-business borrowers to qualify, they must certify that they

  • are in good standing under the laws of this state; and
  • did not owe delinquent taxes to a taxing unit of this state before the date of the initial issuance of the disaster declaration.

Loans may not be made to a micro-business that:

  • has total revenue that exceeds the amount for which no franchise tax is due under Texas Tax Code, Section 171.002 (d)(2);
  • is a franchise;
  • is a national chain with operations in this state;
  • is a lobbying firm; or
  • is a private equity firm or backed by a private equity firm.

Application

Stating October 1, 2024, eligible CDFIs can apply to participate in the Texas MBDR Loan Program by completing the participation agreement, which can be obtained by emailing MBDR@gov.texas.gov. Micro-businesses should contact an approved CDFI for loan application details.

Program Documents & Links: