Newspaper article The Florida Times Union

Businesses Hit, but Small Ones Are Hit Hardest; RESCUING LOCAL VENTURES in Three Years, 140 Businesses Have Defaulted on $12 Million in Loans

Newspaper article The Florida Times Union

Businesses Hit, but Small Ones Are Hit Hardest; RESCUING LOCAL VENTURES in Three Years, 140 Businesses Have Defaulted on $12 Million in Loans

Article excerpt

Byline: KEVIN TURNER

The economy was still booming when Anne Thomas was approved for a $273,000 loan, backed by the Small Business Administration, to buy a hobby store in Mandarin.

But only four months after she bought the store in 2007, the unimaginable happened as the economy dropped into a free fall. She became more concerned about keeping her employees paid and her store's doors open than with other things, she said.

"It was a painful time to go through," she said. "The root cause was that the store wasn't making enough money. And when you're worrying about other people's welfare, you don't sleep."

She was forced to let things go, like buying stock for the store to sell and, eventually, making loan payments, she said.

When she defaulted on the SBA-backed loan, the SBA wrote off $255,539. She sold the store cheap, Thomas said.

"I never saw myself in this position, ever," she said.

Thomas had plenty of company in the economic meltdown that obliterated small businesses along the First Coast and across America and saw many of them defaulting on taxpayer-backed loans.

About 140 Jacksonville-area businesses have defaulted on nearly $12 million in SBA loans in the past three years, according to SBA data obtained by The Associated Press as part of an AP investigation into defaults.

The SBA wrote off nearly $972,000 from its backing on a $1.45 million loan for a Holiday Inn Express in Yulee; $586,000 of a $950,000 loan for Wilcox Shrimping Inc. in Fernandina Beach; $545,000 of a $555,000 loan to The Cooper Cellar Grill and Tavern in Jacksonville; and $340,000 of a $494,000 loan to an Atlanta Bread Company restaurant location in Jacksonville.

Smaller loan write-offs included $10,000 for J & J Auto Body Paint & Collision in Jacksonville and $8,840 for Smith Architect firm in Jacksonville.

Some write-offs came soon after the loan was approved, such the $501,000 write-off last year of a $576,000 loan to R. …

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