SBA snafu

Sunday, September 18, 2005

Thanks to an in-depth investigation by The Associated Press, we now know that millions -- if not billions -- of dollars in government-guaranteed loans intended for small businesses affected by the 9-11 attacks went instead to businesses that had no connection with the terrorists' attacks.

The AP's report is timely because of the massive government funding that has already begun flowing into Louisiana, Mississippi and Alabama as a result of Hurricane Katrina's devastation. Much of that funding will be in the form of loans from the Small Business Administration, the same agency that was supposed to monitor the 9-11 loan program.

A total of $4.9 billion -- 19,000 loans in all -- was guaranteed by the SBA from the special program after 9-11, but an AP computer analysis showed that under 11 percent went to companies in New York and Washington, D.C. The loans went to businesses across the nation, including several in Missouri. Officials at most of the businesses that received the loans said they had no idea the funding they received was part of the 9-11 recovery program.

Part of the loans were made by the SBA directly to businesses that provided detailed information about how 9-11 affected their operations. But many of the loans were made by banks who were on the honor system to make loans for 9-11 recovery. It appears many banks profited by using the SBA-backed program to make loans without regard to any 9-11 connection.

The SBA owes it to the nation's taxpayers to explain how this happened and what will be done to prevent similar misuse of funds in the wake of Katrina.

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