Federal loans granted for risky businesses

Ben Welsh of the Columbia Missourian used Small Business Administration loan records to show that over the past five years, the number of government-backed loans to Columbia's bars and restaurants has skyrocketed far beyond previous levels. "Between August 2000 and August 2005, 33 cents of every loan dollar the SBA backed in Columbia — more than $7.7 million of the $22.3 million total — went to finance bars and restaurants. That is more than double what was given out to Columbia bars and restaurants in the previous five years." The investigation found that Columbia surpasses a national trend. Last year the agency's inspector general found that restaurants received 9 percent of all government-backed loan dollars between 1996 and 2003, more than any other industry. And not only were restaurant loans the most common, they were also the most likely to go unpaid. (Editor's Note: In reporting this story, Welsh used SBA 7a data, which is available from IRE and NICAR.)