Texas SBA Fraud
Everything's Bigger in Texas, Including the Fraud
Texas ranks second in the nation for pandemic loan fraud and EIDL problems. From Houston's energy sector to Austin's startups, borrowers across the Lone Star State are dealing with SBA dysfunction.
The Texas Situation
Texas's business-friendly environment meant the state had one of the largest concentrations of small businesses in the nation when the pandemic hit. With 3.1 million small businesses and a strong entrepreneurial culture, Texans took out massive amounts of pandemic relief.
Now, with repayment underway, Texas borrowers are discovering the same problems plaguing businesses nationwide: impossible-to-reach customer service, contradictory guidance, and aggressive collections while fraudsters walk free.
Key Texas Statistics
- $62+ billion in PPP and EIDL loans distributed to Texas businesses
- 612 fraud prosecutions initiated in Texas (second only to California)
- $1.4 billion in fraud identified by investigators
- 2,800+ Texas borrowers reported to Treasury collections in 2025
- Average EIDL loan: $128,000
Texas Advantage: Homestead Protection
Texas has one of the strongest homestead exemptions in the nation. Your primary residence is protected from most creditors, including the SBA, with unlimited value protection for homesteads up to 10 acres in urban areas or 200 acres in rural areas. This is a critical consideration for Texas EIDL borrowers facing collections.
Major Texas Cities
Houston
As the nation's fourth-largest city and home to the energy industry, Houston saw enormous pandemic loan activity. Oil price volatility in 2020 compounded problems for energy-related businesses. Many Houston borrowers took EIDL loans during the double whammy of pandemic shutdowns and oil price collapse.
The Southern District of Texas has been active in fraud prosecutions, with several high-profile cases involving millions in stolen funds.
Dallas-Fort Worth
The DFW metroplex, with its diverse economy spanning tech, finance, and logistics, received substantial pandemic relief. The area's rapid growth means many young businesses took on EIDL debt that they're now struggling to service as growth has normalized.
San Antonio
Military bases and tourism drive much of San Antonio's economy. Businesses near bases faced challenges during deployment restrictions, while the tourism sector was devastated by travel limitations. The Riverwalk area alone saw hundreds of businesses take EIDL loans.
Austin
Austin's startup ecosystem faced unique challenges. Many tech-adjacent businesses took EIDL loans during the uncertainty of 2020, only to find themselves locked into 30-year debt as the tech sector contracted in 2022-2023. Live music venues, a core part of Austin's identity, were particularly hard hit.
Border Cities (El Paso, Laredo, McAllen)
Cross-border trade businesses faced extended disruptions during pandemic restrictions. Many took EIDL loans expecting a quick recovery that took years to materialize. Import/export businesses along the border are among the hardest hit by collections.
Notable Texas Fraud Cases
"The Houston Energy Scheme" - Houston, 2024
An oil field services company owner obtained $12 million in PPP loans for companies that had no employees. Used funds to buy luxury cars, watches, and a vacation home. Sentenced to 12 years.
"The Dallas Identity Ring" - Dallas, 2025
A criminal organization used stolen identities to file 89 fraudulent EIDL applications totaling $18 million. Ring leaders are awaiting sentencing; cooperating defendants received 3-5 years.
"The Pastor's Scheme" - Fort Worth, 2024
A church leader obtained $4.5 million in PPP loans for fake church-affiliated businesses. Used funds for personal real estate and luxury goods while parishioners struggled. Sentenced to 8 years.
View more cases in our Prosecution Tracker Database.
Texas-Specific Resources
State Resources
- Texas Attorney General: Consumer Protection Division for fraud complaints
- Texas RioGrande Legal Aid: Free legal services in South/West Texas
- Lone Star Legal Aid: Serving East Texas and Houston area
- Texas Access to Justice Commission: Legal aid referrals statewide
Texas Bankruptcy Considerations
Texas's strong property protections make it a favorable state for bankruptcy if EIDL debt becomes unmanageable:
- Homestead exemption: Unlimited value (with acreage limits)
- Personal property: Up to $100,000 for families ($50,000 for individuals)
- Retirement accounts: Generally fully protected
- Wages: Current wages are fully exempt from garnishment for most debts
However, note that federal administrative wage garnishment for EIDL debt is different from state garnishment rules. Consult a Texas bankruptcy attorney for specifics.
Texas Borrower Stories
Texas small business owners have shared hundreds of experiences with SBA dysfunction:
- Energy sector contractors who took EIDL during the 2020 oil crash, now facing collections
- Restaurant owners in major cities who survived shutdowns but can't survive the debt burden
- Small retailers who were told conflicting information about hardship options
- Sole proprietors whose tax refunds were offset without clear prior notice
Share your Texas EIDL story to help other borrowers understand they're not alone.