Kennel, pizzeria received 9/11 loans in Missouri

More than $60 million was distributed to Missouri businesses from federal Sept. 11 loans.

COLUMBIA, Mo. -- The Happy Tails kennel in suburban St. Louis seems an unlikely beneficiary of the federal government's post-Sept. 11 recovery efforts. So does the Sabbath Manor retirement home in Normandy and a Culver's Frozen Custard Butterburger restaurant near the Arkansas border.

The federal Small Business Administration thought otherwise. The kennel, retirement home and burger joint are among 183 Missouri businesses that received a total of $60.73 million in recovery loans intended for economic victims of the terror attacks four years ago, an Associated Press review found.

Fourteen of those low-interest loans topped $1 million, led by a $1.95 million loan to the Culver's franchise, part of a national chain with nearly 300 stores in 15 states. Other million-dollar recipients in Missouri included a St. Louis gas station and a Springfield furniture store.

Other loan recipients had similarly tenuous connections to the Sept. 11 attacks and their aftermath. A Columbia court reporting and stenography business got $711,000. A Kansas City liquor store earned $273,000. And a Springfield beauty shop received $150,000.

Happy Tails co-owner Steve Keller said he had "no idea" the $851,500 loan was provided through the Supplemental Terrorism Activity Relief, or STAR program, an initiative approved by Congress in 2002.

But after banks rejected three of his applications for conventional loans, Keller said he remains pleased with the federal government's generosity -- regardless of the source.

"This is the first time I ever heard of any connection" to Sept. 11 recovery, he said. "But it was nice to get the loan, no matter how we obtained it."

As a tourist-dependent business, Ozark Mountain Sightseeing Inc. in southwest Missouri could make a stronger case for suffering an economic downturn after the terror attacks. President Ed Michel, though, insisted the company's $250,000 SBA loan had nothing to do with the STAR program.

"I wouldn't know anything about that," he said. "In no applications to the SBA was there any reference to (Sept. 11 recovery). We made an application for an SBA loan, something that has gone on for years. It wasn't a bit unusual."

Banks and their loan officers had good reason to approve as many loans as possible from the terror program, turning a profit on the interest while the federal government guaranteed up to 85 percent of each loan, offered reduced lending rates and cut in half the annual fees paid by lenders to SBA.

"Some of the lenders were more specific about following the criteria that was set by the agency in terms of scrutinizing the loan applications," said Carol Chastang, a spokeswoman for the federal agency. "Some may not have been as specific."

Nationwide, the federal government provided, approved or guaranteed nearly $4.9 billion in loans through the STAR program and a second program that required borrowers to document their economic damage from the terror attacks. Those loans benefited 19,000 recipients - even as some New York businesses in the shadow of the World Trade Center struggled to get federal assistance.

--

Associated Press writer Amy Lorentzen in Des Moines, Iowa contributed to this report.

---

Congress to launch inquiry

WASHINGTON -- Congress will investigate the "flagrant abuse" of a federal loan program designed to help businesses recover from the Sept. 11 attacks and make sure such problems don't occur with Hurricane Katrina relief, a key Senate Republican announced Friday. Sen. Olympia Snowe, R-Maine, chairwoman of the Senate Small Business and Entrepreneurship Committee, announced the investigation. in response to an Associated Press story Thursday that showed the federal program 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 apparent widespread abuse of loans provided through the Supplemental Terrorist Activity Relief Act is nothing short of an outrage," Snowe said.

The committee chairwoman said she would demand answers from both the banks that gave the loans and the Small Business Administration, which supervised the program.