Originally published February 23 2006
Questionable federal loans granted for businesses
by Mike Adams, the Health Ranger, NaturalNews Editor
Some federal loans allocated for businesses "adversely affected" by 9/11 went to businesses that were only slightly affected or not at all. In five of the cases no justification was given, and in 21 cases, the justification given was contradictory to the facts.
Federal loans meant for businesses "adversely affected" by the September 11, 2001, terror attacks on the United States often went to businesses barely touched by the tragedy or not at all, according to an audit of the loan program by the Small Business Administration's inspector general.
The inspector general sampled 59 of 7,058 loans disbursed under the SBA's Supplemental Terrorist Activity Relief (STAR) program and found that 85 percent of the loans lacked justifications or had justifications that were less than convincing.
"Due to initial limited lender participation in originating STAR loans, SBA undertook efforts to promote the program by advising lenders that virtually any small business qualified and assuring them that SBA would not second-guess their justifications," the report, by Inspector General Robert Seabrooks, said.
As a result, Seabrooks found, many of the loan recipients did not know they'd been given a STAR loan -- and 25 of 42 borrowers interviewed told interviewers they had not been "adversely affected by the terrorist attacks."
Four days after Friday's release of the report on the STAR program, the SBA put out a press release downplaying problems.
"The inspector general also found that loans made under STAR had a lower default rate than the regular guaranteed loans in the portfolio and that qualified borrowers were not precluded from receiving STAR loans due to a lack of funds," the SBA release said.
It said money was left over at the end of the program's eligibility period, money Congress then authorized SBA to transfer to its regular Disaster Loan program.
A real estate appraiser in Oregon received $371,500 to buy land although his financial reports "showed a growing business and an 87 percent increase in revenues," and the borrower said he experienced no adverse affects from the terror attacks.
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