Bantul district was the one most severely affected by the earthquake. This paper is an attempt to understand the determinants of livelihood recovery after this natural disaster and, in particular, the role of aid in that recovery process. A panel firm-level survey was conducted visiting around 500 mostly small and micro enterprises in Bantul district twice: 6 months and a year after the earthquake. This paper argues that (1) smaller enterprises are more resilient and so are able to recover faster, (2) an industrial cluster system within a subdistrict does provide the necessary support for firms to recover, (3) the quality of village infrastructure could be important, (4) it is important for donors not to give too much assurance of financial support to enterprises, but rather just to distribute it when it is actually available. The faster it is distributed, the better the impact on enterprises affected by the earthquake.