Washington ? Congress will investigate the “flagrant abuse” of a federal loan program designed to help businesses recover from the Sept. 11 attacks and make sure such problems don’t occur with Hurricane Katrina relief, a key Senate Republican announced Friday.

Sen. Olympia Snowe, R-Maine, chairwoman of the Senate Small Business and Entrepreneurship Committee, announced the investigation in response to an Associated Press story Thursday that showed the federal program was so loosely managed that it gave low-interest loans to companies that didn’t need terrorism relief or even know they were getting it.

“The apparent widespread abuse of loans provided through the Supplemental Terrorist Activity Relief Act is nothing short of an outrage,” Snowe said.

The committee chairwoman said she would demand answers from the banks that gave the loans and the Small Business Administration, which supervised the program.

The SBA guaranteed $3.7 billion in loans under the STAR program, bringing its total Sept. 11 assistance package for businesses to nearly $5 billion.

Sen. John Kerry, of Massachusetts, the committee’s top Democrat, joined in the call for an investigation.

“This was a deliberate attempt to cover up White House budget gimmicks that left the SBA’s largest loan program underfunded and on the brink of shutting down,” Kerry said. “The administration asked SBA employees to bend the rules and steer regular loans through the program aimed at helping businesses impacted by 9-11.”