Click Here for video courtesy of KHOU Channel 11, Houston

10:50 AM CST on Saturday, February 10, 2007

By Dave Fehling / 11 News

Here on the Gulf Coast, we know how important it is to get help when disaster strikes.

The government often makes grants and loans available after catastrophes like hurricanes.

But why did the federal government use your tax money to guarantee loans for Houston businesses after the terrorist attacks in New York and Washington?

Nearly $100 million got spread around our city.

The days following 9/11 were dark ones for the country and its businesses.

Continental Airlines warned it could go bankrupt. Houston hotels sat nearly empty.

The Federal government, fearing a nationwide recession, decided to help and not just big businesses like the airlines, but little ones too.

It made millions of dollars in loans available to small businesses adversely affected by the terrorist attacks.

But here in Houston, some 200 businesses got more than $97 million in government-guaranteed 9/11 loans.

11 News showed the list to Houston Congressman Ted Poe.

Thats absurd, he said. The loans were specific for people generally in the New York City region and then those in Washington, D.C. Businesses that were directly affected by what happened on 9/11.

Instead, all over the country all kinds of businesses got the loans.

In our area, the biggest loan, nearly $2 million, went to build a car wash.

One and a half million went to a wellness center; $1.3 million to a pre-school; and a $1.2 million to a dry cleaners.

And on and on.

How were these businesses adversely affected by terrorism?

Apparently they werent, so howd they get the loans?

Turns out, those businesses told 11 News they had no idea they were getting loans from any kind of 9/11 program. In fact, 11 News contacted a half dozen of them, and each of them said the same thing.

One said, first Id heard of terrorism. Another said, I knew we did not apply for a 9/11 loan. Another: First Ive heard of 9/11. And finally, Did not ask me about it, for sure.

So what happened to this taxpayer-funded program that was supposed to help businesses hurt by the terrorist attacks?

The government-guaranteed loans were made through local banks, which were supposed to document the 9/11 effect.

The banks made money on the loans from interest but faced no risk themselves because the federal government would cover the loan if the business went bust.

The banks, if this person defaults, the banks not going to be left holding the bag, Poe said.

11 News: So thats quite an incentive for the banks to use this program.

Poe: No question about it.

Whats more, this government audit found lenders nationwide failed to document any evidence of a 9/11 impact in 85 percent of the loans.

One local lender that responded to 11 News questions was Compass Bank.

A loan officer said, I dont know if we have paperwork to document it.

But he said: Im sure we discussed 9/11 with the customer.

In any case, he said the loans stimulated Houston business and created jobs: Its what the government intended.

Maybe it was, but the governments Inspector General criticized, not those lenders, but the federal agency that was supposed to have overseen the program, the Small Business Administration.

Lack of adequate controls and oversight the inspector said.

The Small Business Administration said it could have done a better job overseeing how lenders gave government-backed 9/11 loans to Houston yogurt shops and even lingerie stores.

The Small Business Administration also said it will not use your tax money to cover any bad loans, unless the lenders can prove the business was a legitimate victim of 9/11.