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9/11 recovery loans went to many far from attacks

While some at Ground Zero couldn't get the low-interest loans they needed, many unaffected businesses did.

By Associated Press
Published September 9, 2005

The government's $5-billion effort to help small businesses recover from the Sept. 11, 2001, attacks was so loosely managed that it gave low-interest loans to companies that didn't need terrorism relief - or even know they were getting it, the Associated Press has found.

And while some at New York's Ground Zero couldn't get assistance they desperately sought, companies far removed from the devastation - a South Dakota country radio station, a Virgin Islands perfume shop, a Utah dog boutique and more than 100 Dunkin' Donuts and Subway sandwich shops - had no problem securing the loans.

"That's scary; 9/11 had nothing to do with this," said James Munsey, a Virginia entrepreneur whose nearly $1-million loan to buy a special events company in Richmond was drawn from the Sept. 11 program.

Arvind "Andy" Patel, 50, said he used his $350,000 loan in fall 2002 to remodel his Dunkin' Donuts shop in western New York state and never knew it was through the Sept. 11 program.

Government officials said they believe banks assigned loans to the terror relief program without telling borrowers. Neither the government nor its participating banks said they could provide figures on how many businesses got loans that way.

But AP's nationwide investigation located businesses who said they did not know their loans were drawn from the Sept. 11 programs, suggesting hundreds of millions of dollars went to unwitting recipients.

The Small Business Administration, which administered the two Sept. 11 recovery loan programs, said it first learned of the problems through AP's review and was weighing whether an investigation was needed.

"We started seeing business (needing help) in areas you wouldn't think of - tourism, crop dusting, trade and transportation. ... So there were a lot of examples you wouldn't think of, at first blush," SBA administrator Hector Barreto said.

Of the 19,000 loans approved by the two programs, fewer than 11 percent went to companies in New York and Washington, according to an AP computer analysis of loan records obtained under the Freedom of Information Act. The pattern left some at New York's Ground Zero seething.

"You have to take it back and give it to us. Even now, I could use it," said Mike Yagudayev, who said the SBA would provide him only $20,000 of a $70,000 loan he requested to rebuild his hair salon flattened by the collapse of World Trade Center towers.

More than 1,500 Florida businesses obtained more than $315-million in low-interest loans under two Sept. 11 programs.

Leslie Bair was one of them. She says she had no inkling the government loan she got to buy a Florida recreational vehicle campground came from money set aside for businesses to recover from the attacks.

"That's disgusting, actually," Bair said Thursday after learning the source of the $396,000 loan. "That's not what we were trying to do. I would hate to think that my money took money away from somebody else who needed it."

[Last modified September 9, 2005, 01:19:15]

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