Small Business: STAR loan helps businesses recover from 9-11 attacks

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In September, groups of America's hunters and fishermen dreamed of sport. They were set to take a break from corporate America, with its cities and suits, and to simply breathe the fresh air of the great outdoors. |ret||ret||tab|

They were geared up to walk broad squares of the flat plains and brave the knee-high, thick brush of Kansas to roust a covey of turtle doves, to visually trace the autumn-colored jackets of pheasants on the run or to wake early to motor to the middle of the lake and snag a striped bass.|ret||ret||tab|

Jeff Rader and his three employees, some working as hunting and fishing guides and another cleaning the rooms at his hunting lodge, were anxiously awaiting their arrival. September was their busiest time of the year the launch of one of the plains states' greatest attractions pheasant season.|ret||ret||tab|

Sept. 11 changed all their plans. Rader Lodge sat nearly vacant on Waconda Lake near Kansas' Glen Elder Dam, while sportsmen in those corporate groups either afraid to fly, be away from their families or needed at their New York corporate addresses cancelled their yearly outdoor sports vacations.|ret||ret||tab|

The unforeseen and the unknown were the only company the lodge could count on. How long the delays in airline flights and planning would be was one big question mark. The lodge suffered greatly since more than 80 percent of its business hails from outside Kansas. Employees still had to be paid to serve the few guests who did arrive and to be on notice in case the groups rescheduled on short notice.|ret||ret||tab|

While business did bounce back, as many enthusiasts simply delayed their trips further into the fall, losing revenue in the peak of the season took its toll on the finances of the hunting and fishing lodge. Luckily, Rader could secure a loan with the help of a special type of loan guarantee now offered by the U.S. Small Business Administration. His lender took advantage of a Special Terrorist Activity Recovery loan, designed to help small businesses across America in their recovery from economic fall-out of the Sept. 11 terrorist attacks.|ret||ret||tab|

The STAR loan program guarantee enabled the Farmer's and Merchants State Bank in Cawker City to offer Rader $125,000 to re-coup his loss and continue his business before the dead of winter set in and hunting season was over. To secure a STAR loan, the lender writes a memo to the loan file noting how the business suffered a loss due to the events of 9-11, and unlike other direct disaster loans, this informal documentations serves as reason enough to apply for the program. The lender simply writes "STAR" on standard 7(a) loan application. The STAR loan structure enables the lender to reduce the basis points charged for the guarantee from 50 to 25, and subsequently, can reduce the borrower's loan interest rate.|ret||ret||tab|

Because the lodge needed funds in a rush to enable it to stay in business, the lender asked Four Rivers Development Company in Beloit, Kan., a provider of a different kind of SBA loan guarantee, to package the loan for Rader prior to submitting it to the SBA, which approved it hastily. With this expedited access to capital, Rader paid his employees and caught up on the bills incurred during the lodge's unforeseen cancellation period. Additionally, he used the opportunity of the influx of capital to fulfill his dream of becoming the sole owner of the lodge, buying out two former partners who had long since lost interest in the business. Now fishermen and hunters can look forward to visiting Rader Lodge and its rustic-themed rooms in the upcoming hunting season.|ret||ret||tab|

SBA's STAR Loans are be available to other businesses that suffered hardship from the events of Sept. 11 through September 2004 or until the Congressional monetary allocation for the program has been exhausted. |ret||ret||tab|

|bold_on|(Sam Jones is regional administrator for Region VII of the U.S. Small Business Administration.)|ret||ret||tab|

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