Mendel Ciment of Tower Computer Services, who overlooks Ground Zero from his office, was denied a loan.
Meanwhile, Caleb Hoag borrowed $16,800 for his North Dakota tanning salon.
Whale watching in Alaska. Scuba diving in the Virgin Islands. Panning for gold in Nevada. Full-body tanning in North Dakota. Whitewater rafting in West Virginia.
From the Hamptons to the Hollywood Hills, thousands of companies that offer pricey pleasures to the affluent have been larded with millions of dollars in taxpayer-subsidized loans because of Sept. 11-related economic woes.
If only Uncle Sam had been so generous to the hard-pressed small businesses of New York City.
The Small Business Administration's disaster loan program is ordinarily limited to companies in an immediate disaster area and nearby counties. But on Oct. 22, the SBA expanded the program for the first time in its half-century history to cover companies in all 50 states that could prove an inability to pay bills and meet operating expenses because of the terror attacks.
Companies across America rushed to cash in on quick, low-interest, federally guaranteed loans. With terms up to 30 years and no interest or principal payments for five months, the loans provided a helping hand for thousands of entrepreneurs.
Like Forrest Johnson, who runs off-the-blacktop Humvee tours of the desert and gold fields outside Las Vegas—and borrowed from the feds so he could continue his quest for tourist dollars.
"After Sept. 11, it was the job of the SBA to help get America back on its feet again," Johnson said. "Mission accomplished."
Unfortunately, the battered businesses in and around Ground Zero did not fare quite as well, according to a New York Daily News analysis of SBA data and dozens of interviews with struggling downtown proprietors.
Owners tell of arbitrary turndowns. Mysterious, lengthy delays. Language barriers that often trip up immigrants. Take-it-or-leave-it collateral demands. Inept functionaries who lose critical paperwork. And a bureaucratic mind-set that spawns thickets of red tape.
So daunting is the process that thousands of New Yorkers have withdrawn their applications — or turned down the agency after a loan finally was offered.
Mendel Ciment, whose four-employee network-management company, Tower Computer Services, originally was located on the 21st floor of 1 World Trade Center, said he was horrified when the SBA demanded he put up his home as collateral for a $70,000 loan. He refused.
"My office was vaporized, my business was vaporized — and now the federal government wanted my house in hock," Ciment said. "This was 9/11 -- not some flood on Main St. or an earthquake out West, yet the SBA acted as if it couldn't tell the difference."
The bottom line: In the five boroughs, 54 percent of business loan applicants who claimed terror-related financial hardships got approval from the SBA. By contrast, more than 30 states — and at least five U.S. territories — had approval rates of 58 percent.
"There are an awful lot of businesses in New York City that we tried real hard to help —and gave every benefit of the doubt when it came to their ability to repay," said William Leggiero, the SBA area director for New York, New Jersey and 11 other Eastern states. "But these were businesses on the edge, barely making it and unable to take on any more debt, and much as we tried, we just couldn't help them."
He said local businesses that were marginal before 9/11 -- and less likely to make it after 9/11 -- wouldn't necessarily qualify for federal lending.
As a result, the approval rate in Manhattan -- 58 percent—was identical to that in the Rocky Mountains and Great Plains states. In other words, in the place where 2,801 innocents died, businesses seeking disaster relief were successful in the same percentages as were companies in Omaha, Wichita and Santa Fe.
The other boroughs fared even worse: In the Bronx, the approval rate stands at 34 percent, the lowest in the city. Queens hit 42 percent, and Staten Island, 57 percent. In Brooklyn, businesses were approved 39 percent of the time — about the same as firms in California, Arizona, Alaska, Hawaii and Guam.
"Why should a company in Honolulu get the same odds I got?" asked Marc Jacobs, co-owner of a family-run car service in Borough Park, Brooklyn. He said he was denied a loan because of a credit dispute that was resolved six years ago.
How did companies thousands of miles from the city qualify for 9/11-related loans?
They claimed, in the language of the SBA, to have "suffered substantial economic injury as a direct result" of the "destruction of the World Trade Center or damage to the Pentagon" — and were able to prove it to the lender's satisfaction.
Among those who met that standard:
Desert Fox Tours, a Las Vegas off-road guide service. It scored a $50,000 loan capped at 4 percent. Owner Johnson said his Japanese market dried up and that he needed the funds to reposition his company to cater to U.S. tourists and develop ghost town and gold mine tours.
Renown Charters & Tours, an Anchorage operator of whale, wildlife and glacier cruises. It snared a $294,000 loan to meet fixed expenses. Owner Randy Becker said that with flights grounded, few travelers were in the mood to spot orcas, otters, porpoises, seals, sea lions and bald eagles in Kenai Fjords National Park. He used the cash to cover payroll, fuel and moorage costs for his boats.
Tan Your Buns, a Fargo, N.D., tanning salon. It borrowed $16,800 for working capital and loan repayment. Co-owner Caleb Hoag said the brutal Fargo winters had been prime tanning season for his customers, many of whom gave up this luxury after 9/11, costing him 37 percent of his normal revenue. The money helped him limp through the summer, when salon sessions are traditionally less frequent.
Dive Experience, a St. Croix, Virgin Islands, scuba diver training service. It got a $42,100 loan. Owner Michelle Pugh said the coral reef — and marine life such as the moray eel and black-tipped shark — lost their exotic appeal after the terror strikes. Cancellations were widespread, and the loan helped her company stay afloat.
New Stone Age, a Saipan-based import-and-trading concern in the Commonwealth of the Northern Mariana Islands -- 8,084 miles from Ground Zero. It pocketed $35,700. Owner Jim Davies said that after 9/11, he needed cash because goods shipped from Indonesia and the Philippines never reached the Marianas.
Redi-Spuds, a Las Vegas purveyor of fresh hash brown breakfast potatoes. It got $50,000. Owner Pete Vescio said "decadence was out of fashion" in September, and the market for hash browns and onion rings quickly fizzled. The loan let him maintain staff, supplies —and potato inventories — until demand for spuds grew back.
Out-of-town recipients tend to gush about their dealings with the SBA. Said Johnson, "They were amazingly helpful, efficient and reasonable."
Pugh said, "They're wonderful people to work with, the process was fabulously painless, and it restored my faith in government."
Vescio agreed. "It was simpler and easier than dealing with our banks," he said.
And in the argot of Fargo, Hoag summed up his experience as "cool beans."
Try telling that to Joshua Rockoff, president of Strike Eagle Graphics, an Internet consulting firm that was housed on the 29th floor of 2 World Trade Center and needed money to buy computers and reconstruct intellectual property.
"They lost my paperwork seven times," he said. "They never apologized; they kept blaming the post office. It was one of the worst experiences of my life."
Rockoff applied for a $150,000 loan in late October and needed a fast turnaround. But, he said, the SBA kept him waiting until June — as revenues nose-dived 53 percent — and then arbitrarily slashed his loan to $57,000. By that time, he no longer was interested.
John Calder, owner of Steamer's Landing restaurant on the Battery Park City esplanade, got a quicker response. His Sept. 24 application for a $180,000 loan was approved Oct. 14 -- but there were strings attached.
He had to put up his co-op for collateral. He had to hand over any future grant monies to pay down principal. Loans from other sources also would go to the SBA, as would proceeds from damage and business interruption insurance.
"The loan would have been completely meaningless," Calder said. "So I turned down the SBA."
Still, for statistical purposes, the SBA is able to list the transaction as an approved loan.
The SBA's Leggiero said collateral requirements, usually a home, minimize taxpayer losses and the risk of default. He added that grant and insurance funds are often tapped to repay the loan because the federal law mandates "no duplication of benefits" for disaster loans.
Immigrant-owned businesses whose principals lack fluency in English often describe a long, nightmarish process before they get loans.
Waitim Ho, one of seven co-owners of the Win Hop restaurant at 51 Bayard St. in Chinatown, said he made at least five trips to the SBA's Worth St. office, spent more than 16 hours, talked to four loan officers through a Cantonese translator, produced hundreds of documents—and still was turned down five times.
The two big sticking points: 1) The SBA kept asking Ho to identify Win Hop's majority shareholder, even though all seven co-owners hold equal 14.3 percent stakes. 2) The SBA kept asking Ho to produce all six of his partners—even though that would mean closing the restaurant at a time sales already were down 50 percent.
Ho said through an interpreter, "I felt desperate and hopeless, and I cried with dry tears."
The ordeal ended in April, when Jack Chung, a business adviser at LaGuardia Community College's Small Business Development Center, read about Ho's plight in a Chinese newspaper and intervened with the SBA to help him secure a 13-year, $70,500 loan. Ho was one of the lucky ones.
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