Not Too Big to Fail: ; Small Businesses Defaulting On Government-Backed Loans

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REDWOOD CITY, Calif. - As the effects of the economic collapse began pouring down Main Street, the government last year was left holding a record $2.1 billion in write-offs of small business loans it had guaranteed. Officials expect the number of defaults to rise as the nation continues to climb out of the recession.

Records show the public is paying to offset bank losses on small business loans across the country, from a convenience store in the tiny Canadian border town of Houlton, Maine, to a graphic arts design company on the island of Hawaii.

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Not Too Big to Fail: ; Small Businesses Defaulting On Government-Backed Loans

Despite having loans written off, little companies such as Caffe Sportivo, an espresso shop and small gym in Redwood City, Calif., are barely scraping by....

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