Post-Sept. 11 loans for Colorado companies | VailDaily.com

Post-Sept. 11 loans for Colorado companies

Associated Press

DENVER – Jim Pasquariello says he was surprised to learn a $100,000 loan to help run his Aurora bakery came from funds approved by Congress to help businesses recover from the Sept. 11 attacks. Eric Kaplan said he had no idea the $130,000 line of credit for his Denver-area footwear stores came from the same program.According to federal loan reports obtained by The Associated Press, 441 businesses in Colorado received approval for loans totaling $134.9 million from the Supplemental Terrorist Activity Relief (STAR) loan program.The reports do not indicate which companies accepted the money or whether loans were paid off or canceled. But the AP review suggests there was little oversight over who was getting the money and that banks had financial incentive to make as many loans as possible.The AP review looked at two Sept. 11 loan recovery programs administered by the Small Business Administration. Under one program, the SBA directly lent money to companies while the other program provided incentives – and guaranteed loans from default – so banks could do the lending. SBA officials acknowledged they left it to banks to determine who should get loans.In Colorado, companies approved for loans included liquor stores, a rug company in Aspen, Big O tires, Quiznos sandwich shops, a nail salon in Englewood, a cleaning service in Fort Collins and a drive-through hamburger stand in Colorado Springs that received approval for $995,000.The largest amount, $1.9 million, was approved for the Villager Lodge in Pueblo. Owner Barb Wojdyla said she was never told it was a STAR loan.”They should have told me, because I had no clue,” she said. She said she paid off the loan and recently sold the commerical property.Stephan Isberian, owner of the Isberian Rug Company in Aspen, said he got a $217,700 loan because customers stopped buying Middle Eastern rugs after the terrorist attacks. He believes the loan was justified.”People felt all oriental rugs were associated with terrorist nations. There was resentment to anything from the Middle East,” he said.Others were puzzled and angered by their role in the loans.After Sept. 11, Pasquariello said, he lost his travel-heavy job with a building materials company and he may have mentioned that to a loan officer. But he said he was never told the money came from a STAR loan.Kaplan, meanwhile, said he didn’t even buy his six Good Feet stores until 2003 and was not told the loans were set up to help businesses recover from the terrorist attacks.”This is news to me. It was never disclosed to me where these funds came from,” he said.Kaplan said his Wells Fargo bank loan officer did not ask him any questions about Sept. 11 and he never filled out any paperwork regarding the impact of the attacks on his business.”She never even mentioned it,” he said of his loan officer.Matt Hurwitz, vice president of public relations for Wells Fargo, declined to comment. The company said it “continues to strictly adhere to SBA operational standards for all SBA loan originations.”At least 14 Quiznos shops across the country received approval for $2.1 million in loans. A spokeswoman for the Denver-based company did not return repeated calls seeking comment.SBA spokeswoman Carol Chastang said responsibility for the STAR program was delegated to banks.”The requirements were not as specific as a disaster loan. A lot of banks across the country were approving these loans,” she said. “It may have varied from lender to lender.”SBA documents obtained by AP show banks profited from the interest while the government guaranteed between 75 percent and 85 percent of each loan, leaving banks with little risk. The annual fee lenders paid to SBA also was slashed in half, to 0.25 percent, meaning lenders could save $5,000 a year for every $2 million they loaned under STAR.Christopher Chavez, spokesman for the SBA in Colorado, said the government was in a rush to help after the attacks and only required banks to submit a one-page letter explaining why the businesses were hurt by the attacks.”I would hope the lender would be talking to the businesses. They may not have. There was definitely an advantage to the lender to get that reduced fee,” he said.Brian Vogt, director of the state’s Office of Economic Development and International Trade, said he was aware of the federal program. He said the state has a similar revolving loan program for rural areas, but it is closely monitored and audited.”There are all kinds of layers of accountability for these loans,” he said.Vail – Colorado