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They're going fast!
Posted on 09/09/2005 5:54:23 AM PDT by Cagey
HARRISBURG, Pa. - In the name of helping businesses hurt by the Sept. 11, 2001, terrorist attacks, the federal government approved nearly $111 million worth of loan guarantees and low-interest loans for a motley mix of Pennsylvania enterprises, including doughnut shops, a bowling alley, an exercise gym, a flour mill and a tree nursery.
The U.S. Small Business Administration provided almost $5 billion through a mix of direct loans and federal guarantees for bank-issued loans. The SBA loans carried low-interest rates and payments deferred for two years; the guarantees assured banks that taxpayers would cover any defaults, and the government encouraged banks to sign up by slashing its lending rate in half.
But the banks were not required to tell borrowers that they had applied to the Sept. 11 program - and many borrowers did not seem to know their loans came from the program.
"Whatever the banker told us, that's what we did," said Anuraag Mullick, part owner and general manager of the Days Inn hotel in Meadville, 85 miles north of Pittsburgh and 130 miles northwest of Shanksville, where the hijacked Flight 93 crashed.
Mullick's group was approved for nearly $1.3 million in loan guarantees in December 2002 to buy the hotel, restaurant and conference center.
Overall, loans and loan guarantees earmarked for terrorism recovery were approved for more than 300 Pennsylvania businesses through 2004. Nationally, nearly 19,000 applications were approved, according to SBA records.
A $1.5 million SBA loan guarantee helped Vasant Patel buy three Dunkin' Donuts shops in Reading while Bill Reese got a $997,000 federally backed loan to buy a bowling alley near Allentown. The owners of a Thorndale gym and Pennsburg-based tree nursery said they used the money to expand their businesses and refinance existing loans.
Business owners did not recall lenders or the SBA asking about how they were affected by the attacks. Some said their business slowed down temporarily after the attacks, but that they would have sought financial help anyway.
"In the bowling business or the restaurant business, there's a little more high risk than a straight real-estate deal," said Reese, who used his January 2003 loan to buy Blue Valley Lanes in Wind Gap, 60 miles north of Philadelphia. "People who are a little higher risk need to go with the backing of the federal government."
SBA officials defended the program, saying it buoyed struggling businesses and saved 20,000 jobs nationally; they also said the rules were flexible.
"If a business in California had a supplier in New York that was knocked out, they could say they were affected," said SBA spokesman John Fleming. "There was a lot of leeway on purpose."
Lenders benefit from the lower fees on the loan guarantees, and can choose to pass that savings onto the borrower by offering a lower interest rate, Fleming said.
Normally, the SBA introduces special direct-loan programs to help areas hit by disaster, such as a flood or a hurricane. The Sept. 11 program was unusual because it was so broad, applying to businesses in every state.
One financial expert was astounded when he was told of the varying types of businesses that were granted aid.
"Really?" said Samuel Weaver, the former director of financial planning and analysis for Hershey Foods Corp. and currently a professor of finance at Lehigh University.
However, Weaver also noted that SBA's guidelines were so loose that one could make a case for just about any business.
In the case of the Meadville Days Inn, Unity Bancorp. told the SBA that the loan should be approved because the entire hospitality industry was damaged by a downturn in tourism and travel following the attacks.
The SBA approved the application, said Michael F. Downes, Unity's chief lending officer.
If you want a Google GMail account, FReepmail me.
They're going fast!
Yeah, and I'll bet that happened.
I stand in awe of the powerful insight of this quote.
Some of these sound dubious, but policemen are first responders, so the doughnut shops sound legitimate...they are vital for the cops' being able to carry out their duties.
SBA loans interest rates are Wall St Journal prime plus a spread.
Most of it will end up (if it isn't already there) in the numbered foreign bank accounts of scumbag politicians and their connected surrogates and friends. Makes me want a Democrat tax hike. Not.
I should have listened to that crazy guy on TV, the guy in the green Riddler costume with dollar signs all over it. "The government is just GIVING money away!"
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