Illustration: Sarah Grillo/Axios

The Federal Reserve is pouring trillions of dollars into programs making it easy for big companies to access liquidity on capital markets, and the Fed's new Main Street Lending Program is designed to target medium-sized businesses that need between $1 million and $150 million in marginal new debt. But the state of affairs for small businesses is still bad.

Driving the news: The government has pledged $350 billion, and probably will commit another $250 billion on top of that, for small businesses to keep their employees on payroll. But the program got off to a very rocky start, and it's still extremely rare to find businesses that have actually received any funds.

Why it matters: Small businesses are the most fragile part of the economy — and the hardest to rebuild. They don't have the wherewithal to be able to service extra debt, so they need loans like these that are designed to be forgiven. The scheme to help them keep their employees on payroll is however proving to be extremely complex, with a lot of moving parts that are prone to breaking.

  • How it works: Small businesses need to apply to banks (as non-bank lenders generally cannot participate). Banks, in turn, are overwhelmed and barely capable of serving their existing small business clients. They generally have no bandwidth to go through the laborious process of onboarding new clients. So businesses first need to be lucky in terms of which bank they have a relationship with.
  • The banks will then ask the businesses for a huge amount of documentation, which may not be easily available to owners who are stuck at home. The banks' websites for uploading that documentation have been crashing a lot, since the banks had almost no time to build and debug them.
  • The documentation then needs to be uploaded by the banks to the Small Business Administration, through an outdated system called E-Tran that is also creaking under the strain.
  • Then the SBA needs to approve the loan. No one really knows how long that's likely to take, on average, since the SBA has never dealt with anything like this magnitude of applications.
  • Once the loan is approved, the bank will contact the borrower to finalize the paperwork, which again takes time.

Context: In New Zealand, a similar scheme is getting money into applicants' accounts within a day or two, and with almost no hassle. In Switzerland, small businesses can find themselves funded in as little as 30 minutes.

  • Private-sector actors like Appian have built products that automate much of the process for banks, and Appian CEO Matt Calkins tells Axios that at least one major international bank is using his product to do exactly that. But that doesn't solve problems at the SBA end.

The bottom line: The Paycheck Protection Plan application process is "like an Easter Egg hunt with the most sinister possible Bunny who hid the eggs," tweeted venture capitalist Alex Rampell. Nearly all American small businesses are theoretically eligible for this scheme. But it seems probable that many of them will end up empty-handed, through no fault of their own.

Go deeper

Updated 21 mins ago - World

Hong Kong media tycoon Jimmy Lai arrested under national security law

Media tycoon Jimmy Lai at the Next Digital offices in Hong Kong in June. Photo: Anthony Wallace/AFP via Getty Images

Hong Kong pro-democracy activist Jimmy Lai has been arrested for "collusion with foreign powers" and the offices of his newspaper raided, said Mark Simon, an executive at the tycoon's media firm Next Digital on Monday.

Why it matters: He was arrested under the new national security law that gives Beijing more powers over the former British colony. Lai is the most prominent person arrested under the law — which prompted the U.S. to sanction Chinese officials, including Hong Kong leader Carrie Lam, over Beijing's efforts to strip the territory of its autonomy.

Updated 30 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 1:30 a.m. ET: 19,861,683 — Total deaths: 731,326 — Total recoveries — 12,115,825Map.
  2. U.S.: Total confirmed cases as of 1:30 a.m. ET: 5,044,864 — Total deaths: 162,938 — Total recoveries: 1,656,864 — Total tests: 61,792,571Map.
  3. Politics: Pelosi says states don't have the funds to comply with Trump's executive order on unemployment — Mnuchin says Trump executive orders were cleared by Justice Department.
  4. States: New York reports lowest rate of positive coronavirus test results since pandemic began
  5. Public health: Ex-FDA head: U.S. will "definitely" see 200,000 to 300,000 virus deaths by end of 2020. 
  6. Schools: 97,000 children test positive for coronavirus in two weeks — Nine test positive at Georgia school where photo showing packed hallway went viral .

97,000 children test positive for coronavirus in two weeks

A boy has his temperature checked as he receives a free COVID-19 test in South Los Angeles in July. Photo: Mario Tama/Getty Images

At least 97,000 children tested positive for COVID-19 in the final two weeks of July and there's been an estimated 338,000 cases involving kids in the U.S. since the pandemic began, a new report finds.

Why it matters: The findings in the report by the American Academy of Pediatrics and the Children’s Hospital Association comes as schools and day cares look to reopen in the U.S., with New York Gov. Andrew Cuomo (D) announcing Friday that school districts in the state can reopen in the fall amid lower coronavirus transmission rates.