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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  • The documentation then needs to be uploaded by the banks to the Small Business Administration, through an outdated system called E-Tran that is also creaking under the strain.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 11 mins ago - World

Myanmar's deposed leader Aung San Suu Kyi sentenced to 4 years in prison

An anti-coup protest in Yangon, Myanmar.Photo: Hkun Lat/Getty Images

A Myanmar court sentenced the country's ousted leader, Aung San Suu Kyi, on Monday to four years in prison on charges of "inciting public unrest" and breaking COVID-19 protocols, per the New York Times.

Why it matters: It's the first of several verdicts that could result in the 76-year-old Nobel laureate being imprisoned for the rest of her life.

2 hours ago - World

Pope Francis denounces European governments' migrant response

Pope Francis adresses refugees at the Reception and Identification Centre (RIC) in Mytilene on the island of Lesbos on Sunday. Photo: Louisa Gouliamaki/Pool/AFP via Getty Images

Pope Francis criticized European countries' response to migrants and asylum seekers during his visit to a refugee camp on the Greek island of Lesbos Sunday.

Why it matters: The pope said "migration is a humanitarian crisis that concerns everyone," but little had changed in the global response to displaced peoples since his first visit to Lesbos five years ago, per a transcript of his remarks. "Human lives, real people, are at stake. ... let us stop this shipwreck of civilization!"

Chris Cuomo accuser: On-air "hypocrisy" spurred report

Journalist Chris Cuomo. Photo: Gilbert Carrasquillo/GC Images

A woman who accused fired CNN journalist Chris Cuomo of sexual misconduct said Sunday she decided to come forward after learning of his comments about women who made similar accusations about his brother. He denies her allegations.

Why it matters: Her attorney Debra Katz said in a statement that she heard "the hypocrisy" of his on-air words about his brother, former New York Gov. Andrew Cuomo, and was "disgusted by his efforts to try to discredit these women," so "retained counsel to report his serious sexual misconduct against her to CNN."

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