Question marks surround a state loan program intended to provide some relief to small businesses.

The administrator of Gov. Jay Nixon’s $2 million small loan program is under review for reportedly questionable business practices with another state agency, The Associated Press reported.

And a local economic development official questions how much of the loan pool will find its way to Northwest Missouri after a state commission selected the nonprofit group from St. Louis to administrate the loans.

The state in June began taking applications for the micro-loan program, which is aimed at increasing small-business owners’ access to capital during the recession.

Businesses with up to five employees can apply for loans between $2,500 and $25,000 at an interest rate of 3 percent to be paid back within 10 years.

Mo-Kan Development Inc. in St. Joseph requested $150,000 for the loans in Andrew, Buchanan, Clinton and DeKalb counties. Green Hills Rural Development Inc. requested $200,000 for Harrison, Daviess, Caldwell, Livingston, Grundy and other counties.

But both were turned down.

Instead of regional agencies divvying up the money to respective businesses, the state had opted for all of the funds to be funneled through a single agency, said Tom Bliss, executive vice president of Mo-Kan Development Inc.

“DED has recommended that the board select Justine Peterson, a St. Louis nonprofit, to serve as administrator for the entire state,” Kathleen Blarney of the Missouri Development Finance Board wrote Mr. Bliss in June.

Mr. Bliss said Northwest Missouri is often overlooked.

“We truly thought we would have better coverage,” he said. “At the time, I was really upset because we’d been encouraged to apply, but we’ve kind of moved on.”

Now that single agency from St. Louis is under fire from the state for allegedly charging high interest rates to the low-income homeowners participating in a state grant program aimed at decreasing foreclosures, according to The Associated Press.

“State documents obtained by The Associated Press show that the Justine Petersen Housing and Reinvestment Corp. also is suspected of altering financial documents in an attempt to hide its costly customer charges from state inspectors,” the AP reported Friday.

The Missouri Housing Development Commission stopped all payments to Justine Petersen and now the Department of Economic Development is considering whether it should disqualify the group as administrator of the loan program. The group has denied any wrongdoing.

“Wow, that’s the first I’ve heard of that,” Mr. Bliss said.

Department spokesman Keener Tippin said he’s unsure how long the review will take, but that it wouldn’t affect the ultimate disbursement of the loans, which haven’t been awarded yet.

The department has neither signed a contract with Justine Petersen nor has it transferred any money to the group, he added.

“The program’s moving forward,” Mr. Tippin said.

Alyson E. Raletz can be reached

at alysonraletz@npgco.com.