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In a report released Wednesday, Inspector General Kitley Covill said the city’s Office of Economic Development OK'd 11 “risky” small business loans from 2003 to 2010. Issued through the city’s commercial loan program, the money lent totaled more than $950,000, of which more than $650,000 is still owed.
Six loans are in default, the largest of which is a $150,000 loan to Body & Soul Essentials Inc. Another is recently delinquent, the report says.
Covill noted that all of the loans were given to businesses in “a challenged economic area” of the city. She said it was not surprising officials were having trouble recouping the money.
“As such, the loans were risky and were given to encourage viable small business,” she wrote. “It is not surprising that a number of the business entities have had financial challenges and are having trouble repaying the city.”
She also said city files detailing the loans were incomplete, missing crucial documents, featured conflicting terms for commitment of the loan and had confusing language regarding repayment.
The city did not always follow protocol either, the report says, as it often did not confirm personal financial statements prior to issue the loans.
Mayor Mike Spano, who recommended the inspector general conduct the report, said the negligence of the outstanding loans was apparent when he took office and that the city is in the process of making changes to the loan program.
He added that all of the businesses in default have either already been sued or are now in the process of being sued.
“Once again, it has become apparent that some businesses took advantage of the generosity of the city and are not paying its fair share back to the Yonkers taxpayers,” he said in a statement. “It is time for this well-intended program to get back into shape so that our businesses can thrive here in Yonkers.”
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