Disaster pork & incompetence: the 9-11 prelude
Small firms got Sept. 11-related loans By JEFFREY GOLD, Associated Press Writer Last Updated 5:06 pm PDT Thursday, September 8, 2005 Get weekday updates of Sacramento Bee headlines and breaking news. Sign up here.
NEWARK, N.J. (AP) – Marina operator Joseph Palmisano said he is not sure if the terrorist attacks affected his business, but he knows that the $810,000 federal loan he got afterward helped him buy out his partner.
He wanted several million dollars to take control of AP’s Inlet in Belmar, which his father started in 1976, but was glad to get the lesser amount through a Small Business Administration loan.
“They were the only people who could give me the loan, I can tell you that,” Palmisano said.
The loan to AP’s Inlet was among about 700 the SBA approved for New Jersey companies, and one of about 19,000 loans made nationally to help small businesses recover from the Sept. 11 attacks.
However, the $5 billion effort sent many discounted loans to firms that did not need, or know that they were receiving, terrorism assistance, an Associated Press review has found.
The approvals in New Jersey totaled over $186 million, in amounts that ranged from $2,700 to $2 million. The agency was not able to determine how many of the loans were ultimately accepted.
AP’s Inlet, named for Palmisano’s father, founder Anthony Palmisano, got its loan under SBA’s STAR (Supplementary Terrorism Activity Relief) program, as did about 170 of the New Jersey loan recipients. STAR is among several Sept. 11 loan programs offered by the SBA.
Criteria for the STAR program are broad, allowing loans to a small business that “suffered economic harm or disruption of its business operations as a direct or indirect result of the terrorist attacks …”
Palmisano is not the only STAR recipient in New Jersey who suffered little fallout from the Sept. 11 attacks, which did have a widespread effect on the state. New Jersey lost 693 residents in the 2001 terrorist attacks, and many thousands watched from their homes or workplaces as the World Trade Center burned and collapsed across the Hudson River.
A $900,000 STAR loan made in October 2002 helped Andy Shah buy Oaklyn Discount Liquors, in Oaklyn, N.J., Shah said. His store is among at least eight liquor stores in New Jersey that were awarded Sept. 11 loans.
Perhaps not as surprising were the number of loans approved that were associated with travel: 83 to limousine companies, 23 to travel agencies, seven to taxi services and six to tour operators.
Some 19 Dunkin’ Donuts stores in New Jersey were approved for STAR loans, which ranged from $277,000 to $1.45 million, making them the state’s leading franchise operation in the loan program.
Dunkin’ Donuts stores are individually owned, although some franchisees in New Jersey own several stores, said Andrew Mastrangelo, a spokesman for parent company Dunkin’ Brands Inc., of Canton, Mass. The parent company did not provide its operators with any information on the SBA program, he said.
“We didn’t do anything of the sort,” Mastrangelo said. “We didn’t make any kind of formal announcement. We didn’t have any meeting.”
New Jersey’s proximity to the World Trade Center contributed to the loss of life among state residents, since many residents worked in New York, but also brought it more business immediately after the attacks, a Rutgers University analyst found.
Financial jobs shifted across the river for several months during the cleanup phase, said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers.
Hughes said consumer spending that normally would have been done in Manhattan appears to have moved to New Jersey for a while after the attacks, such as at spas and restaurants.
“Surprisingly, consumers just didn’t go into a hole. It was like, when the going gets tough, the tough go shopping,” Hughes said. For instance, he noted that October 2001 auto sales were good in New Jersey and nationally.
He contrasted this to the first Iraq war, when “people stayed glued to the TV sets and didn’t go out.”
Not enough people went out to the Family Twin Cinema in Wrightstown for the movie theater to survive after Sept. 11, according to the operator of the movie theater, Jimmie Vera, who blamed road closures through nearby Fort Dix for making it harder for audience members to drive over.
“I was averaging $30,000 a month, and then after 9-11, the government closed the roads, and business went down big-time,” said Vera, 41, who said he rented the shuttered theater in early 2001 but had to close in early 2003 despite getting a $44,300 loan in November 2001.
That loan was under an SBA program, EIDL (Economic Injury Disaster Loans) for business that “suffered substantial economic injury,” according to agency guidelines.
He said local and military officials promised the roads would be reopened in six months, but, “The roads never opened up, and it caused a financial disaster for me.”
Vera said he moved back to Columbus, Ohio, and re-enlisted in the Army National Guard. He said he still owes about $41,000 on the loan.
Fort Dix spokeswoman Carolee Nisbett said that a bypass from Pemberton to Wrightstown opened in spring 2005, but that the main route through the base, Texas Avenue, remains closed to the public.
One of the smallest loans approved for a New Jersey company was $3,600, to Istanbul Inc., a candy import business operated by Matt Dagistanli of Rutherford. It wasn’t enough, he said.
“It helped me a lot to help me survive, but I needed more to develop my business, which I couldn’t get, because I didn’t have credit in those days,” said Dagistanli, 44, who said he was a naturalized citizen originally from Turkey.
“If they had been able to give me more money, 30 or 40,000, I would have been able to survive,” he said.
The loan was under an SBA program for companies in the area of the World Trade Center disaster, and Rutherford is just 10 miles away.
But proximity wasn’t the problem for Dagistanli, who said his main market for the candy was gift shops and gourmet stores.
“After 9-11, people for quite some time did not order as much … and that dropped the sales,” he said. “I was swimming against the flow.”
The candy business, which was a part-time venture, eventually closed, and Dagistanli said he now is making a living by making mortgages.