Mr. Jensen's column last week on the SBA exhibited many errors and a substantial lack of factual information on the program he was writing about. The head of the SBA has asked me to submit this letter to the editor in response:
Setting the Record Straight on STAR Loans
In the interest of making sure your readers are not misinformed, let me make a few facts clear.
After the 9/11 terrorist attacks, the U.S. Small Business Administration made over $500 million in low-interest disaster loans to New York City businesses directly impacted by that horrific disaster. No victims who qualified for disaster loans were prevented from receiving one.
Recent sensational media reports and press statements about a loan program called Supplemental Terrorist Activity Relief (STAR) suggest that the recipients of these loans took away monies from deserving businesses in New York. Those suggestions are false and misleading!
Congress determined to set up the STAR program because of the clearly recognized nationwide economic downturn following the terrorist attacks. STAR loans were regular SBA working capital loans that carried a government guarantee and were intended for U.S. small businesses no matter where they were located. These loans were not made by the government, but by participating lenders, following clearly established procedures. Despite our repeated concerns about the broad reach of the STAR program Congress created, numerous statements by members of Congress at the time clearly indicate that this was their intent.
Again, STAR was designed by Congress to make capital available nationwide to small businesses. By that measure, their objective was accomplished. Furthermore, STAR loans are performing better than other government loans made through SBA, so there is no undue risk to the taxpayer at this time.
To reiterate, STAR did not take away anything from New York disaster victims and to suggest otherwise is dishonest. Furthermore, STAR loan recipients did nothing wrong when they received one of these regular working capital loans (with no special benefit) and they certainly don't deserve to be publicly criticized and accused as is happening in the media. An audit we ordered by the SBA's Office of Inspector General indicates that STAR loan documentation by participating lenders could have been better. We agree. Nevertheless, the SBA operated the program exactly as Congress intended, accomplishing their objective of economic stimulus to affected businesses across the nation.
Hector V. Barreto Administrator U.S. Small Business Administration