Disaster Recovery Loan SB6

Disaster Recovery Loan SB6

Background and Purpose

Senate Bill 6, by Sen. Kolkhorst, from the 86th Legislative Session relates to emergency and disaster management, response and recovery. Recommendations contained in the ‘Eye of the Storm’ report guided legislation this past session and through SB 6, the Disaster Recovery Loan Program was created. This program allows eligible counties, municipalities and school districts who meet the qualifications to access an application for a loan program, to be established by TDEM.

The disaster recovery loan account was created as an account in the general revenue fund with the comptroller, to be administered by TDEM. Money in the account shall be used to provide short-term loans to eligible political subdivisions.


  1. Must be a political subdivision located wholly or partly in an area declared to be a disaster by the Governor of Texas or U.S. President;
  2. Prior to application of the loan, must have submitted within 15 days of adoption the political subdivision’s operating budget for the most recent fiscal year, and have submitted an application for a loan from the Federal Emergency Management’s Agency community disaster loan program;
  3. Must have completed an assessment of damages due to the disaster for which the declaration was made;
  4. It is determined, in consultation with FEMA, that the estimated cost to rebuild is greater than 50% of the eligible entities total revenue for the current fiscal year.

Loan Conditions

  1. The loan must be made at or below market interest rates for a term not to exceed 10 years;
  2. The loan proceeds must be expended by the eligible recipient solely for disaster recovery projects;
  3. If the term of the loan exceeds two years, the state auditor shall conduct an audit of the recipient to determine their ability to repay the loan under the current terms;
  4. Loan forgiveness may be granted to a recipient if the state auditor determines they are unable to repay the loan; this is subject to the approval by the legislative audit committee.