Video: 9/11 program under investigation

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updated 11/22/2005 7:31:44 PM ET 2005-11-23T00:31:44

In 2002, Jeff Gentile received a government loan to open a Dunkin' Donuts in Pennsylvania. He was recently shocked to learn that the government may have glazed over the rules — the loan was supposed to go to businesses hurt by the 9/11 attacks.

"Not only was my business not harmed," Gentile says. "My business didn’t exist when 9/11 happened."

The Blue Ribbon Pet Salon near Seattle also didn’t exist on 9/11. Owner Tracey Youngerman says her bank never told her these were 9/11 loans.

"Somebody screwed up," she says. "We received money from a fund we should never have gotten."

Neither of these businesses is accused of doing anything wrong.

But government watchdogs are investigating whether the $3 billion loan program was mismanaged by the Small Business Administration or exploited by banks, which could make more money on these loans than on standard government loans.

One question: Why did 29 Dunkin' Donuts shops and 54 Subway sandwich shops get these loans?

Steve Ellis of Taxpayers for Common Sense says, "Congress and the SBA appeared to be more interested in shoveling the money out than they were in actually making sure that they were helping people affected by the 9/11 attacks."

After the program got off to a slow start, an SBA official notified lenders that "it does not matter how severe the impact was, or how long it lasted" for a business to qualify.

The SBA defends its handling of the loans and says the money was for businesses across the country — even those indirectly hurt by the economic downturn after 9/11.

For example, the SBA argues, it was absolutely appropriate to provide a loan to an Oregon winery. Why? Because after 9/11, fewer New Yorkers went to expensive restaurants, and sales of the winery's pinot noir dropped.

But Gentile says his loan should have gone to a business actually hurt by the attacks, adding, "Quite honestly, it makes me angry."

And, he says, it makes him worry what will happen when the SBA starts handing out money meant for victims of Hurricane Katrina.

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