Were 9/11 loans money well spent?
86 local firms got more than $12.5M
By Tim Logan
Times Herald-Record
[email protected]
The terrorist attacks of Sept. 11, 2001, had a huge impact on the mid-Hudson.
But did they really cost a Rhinebeck bistro more than $1 million?
Who knows. But that's how much Terrapin Restaurant received in loans intended to help small businesses recover from the effect of the attacks, according to data obtained by the Associated Press from the U.S. Small Business Administration.
Across Orange, Ulster and Sullivan Counties, 86 companies received more than $12.5 million in loans. They ranged from $2,600 for a courier in Monticello to $1.25 million for the Kiryas Joel Meat Market.
More than half of the local money went to just eight companies, including four recipients of at least $1 million.
Several of the larger loan recipients didn't return phone calls seeking comment yesterday. One who did called the program a lifeline.
"For my company, it meant being able to stay in business, as opposed to having to shut my doors," said Fred Watson, CEO of Watson Services in Newburgh.
His food services company lost a big federal contract in New York City after Sept. 11. It eventually had to close its Brooklyn plant and lay off 55 people.
A $530,000 loan absorbed some of the losses, Watson said, and gave him the cash flow to regroup. Today, Watson Services has picked up lots of business outside New York City and has nearly twice as large a work force as it did before the attacks.
"This loan, in my case, worked exactly the way it was supposed to," Watson said.
But that wasn't the case everywhere.
According to the Associated Press review, thousands of companies nationwide received loans through two programs designed to help businesses recover. Many, such as a South Dakota radio station, a Utah dog boutique and dozens of Dunkin' Donuts franchises, are a long way from Lower Manhattan and had no apparent connection to the attacks.
And that irks Ed Koren.
Koren and his wife, Betty, run Bridges Over Time, an antique dealership in Walden. A handful of Manhattan shows each fall provide most of their income, and in 2001, those shows were canceled.
"It hits you pretty hard," he said. "(The antique business) took about two or three years to recover."
The Korens received a $26,000 loan, and it helped make ends meet.
The government-backed loans didn't just help businesses recover. They also fueled growth.
Ideal Snacks in Liberty received $1 million in January 2003, while it was in the midst of a big expansion. Zeke Alenick, the company's owner, didn't return messages seeking comment.
The Kiryas Joel Meat Market got $1.25 million in July 2002. The money helped fund a $3 million chicken slaughterhouse that opened last year.
The market has changed hands since then, and new owner Joe Weinberger said he had "no idea" about the loan. Attempts to contact former owner Lipe Cohn were unsuccessful. Village Administrator Gedalye Szegedin said the project had created 100 jobs.
"I think it's a very successful investment," he said.
Others are worried about misuse of the program, and several members of Congress have called for an investigation.
But SBA spokesman Mike Stamler noted that there are two distinct programs, and that some officials were confusing them. One provided low-interest loans for companies close to New York and Washington that were directly affected; the other gave market-rate loans for companies hurt by the nationwide economic slowdown.
Many of the eyebrow-raising loans came from the latter category, Stamler indicated.
One of those was for Terrapin, the swank dining spot Josh Kroner runs in Rhinebeck.
He got a $1.075 million loan through the SBA to fund a move from West Hurley two years ago. Kroner said he didn't intend to apply through a disaster recovery program. He figures his bank tapped the program because that's where the money was. He said he only vaguely remembered being told about 9/11 recovery funds.
"I spent seven hours on closing day," he said. "To me it was all a blur of signing paperwork."
In the end, Kroner says, he didn't even get that great a loan. Today he's paying 9 percent interest.
"It's not exactly a favorable rate," he said. "I'm planning to refinance the whole package."
Five largest 9/11 recovery loans to the mid-Hudson.
$1.25 million: Kiryas Joel Meat Market, Kiryas Joel
$1.075 million: Terrapin Restaurant, West Hurley (has since moved to Rhinebeck)
$1 million: Ideal Snacks, Liberty
$1 million: Econo Lodge, Monticello
$722,000: Relax Inn, Cochecton
