The stimulus plan to protect the U.S. economy from the ravages of Covid-19 unlocks hundreds of billions of dollars for small
businesses -- yet the system set to distribute the money is already overwhelmed.

The agency that will oversee the unprecedented $350 billion loan program has been challenged to even maintain a much smaller, existing program, with its website crashing repeatedly. The network of 800 approved lenders expected to divvy up funding have received little guidance so far. It’s unclear, for instance, whether a business owner could apply online or would have to meet with the lender in person.

“There’s a lot we still don’t know,” said Karen Harned, executive director of the Small Business Legal Center at the National Federation of Independent Business, the largest small-business association in the country. Unknowns include: how long it will take for companies to get checks.

That leaves Katalina Mayorga in limbo at a time when she needs financial assistance.

Her El Camino Travel based in Washington, D.C., is losing about $300,000 in revenue this year after three months of canceled trips and refunds.

She tried applying for existing disaster loans from the Small Business Administration more than a week ago and hasn’t heard back. She emailed to follow up and received a message that the inbox was full. She joined a call Wednesday afternoon that her industry association put together with an SBA representative. It was cut short when too many people joined, crashing the line.

“It was just craziness, honestly, the last few weeks,” said Mayorga, whose travel agency creates custom vacations for about $3,000 and has largely ground to a halt amid shutdowns to try to contain the coronavirus pandemic.

Shoring up the roughly 30 million small- and medium-size businesses in the U.S. is a key element of the $2 trillion stimulus package from Congress. These businesses employ about half of the private workforce and accounted for two-thirds of net employment gains in recent years. Their financial distress has contributed to a record 3.28 million Americans filing for unemployment last week.

The legislation is waiving some paperwork requirements to speed up the loans, and the government has signaled urgency. “By the end of next week we want all the banks to be able to originate loans same day,” Treasury Secretary Steven Mnuchin said.

Herculean Effort
Doling out $350 billion in loans will require a herculean effort -- the sum is more than 10 times the amount the SBA has ever distributed in a year, said Kurt Chilcott, chief executive of San Diego-based SBA lender CDC Small Business Finance.

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