A man wearing a mask walks past 'Store closing' signs amid the coronavirus pandemic in New York City on May 7, 2020.
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Updated: May 14, 2020 4:31 PM EDT | Originally published: May 13, 2020 4:16 PM EDT

Arthur Fournier was worn out when the four-day Antiquarian Book Fair wrapped up on March 8 on Manhattan’s Upper East Side. But the 45-year-old rare books dealer knew he should start getting his sales in the mail. More coronavirus cases were starting to spring up around the U.S., and he had a feeling that things were about to get a lot worse. “Maybe there was something in my back of my mind saying, ‘Hey, get these out before this overwhelms everyone,’” Fournier recalls.

Things did get worse, and two months later, Fournier’s one-man business is holding on, tenuously. His big clients — libraries, universities, historical societies — have stopped buying, and visits to private collectors’ houses are out of the question. But his Crown Heights mortgage is due regardless of the health of the rare book trade. And so last month, Fournier decided to seek out a loan under the Paycheck Protection Program, the government’s ambitious plan to prop up small firms with potentially free money to get through the pandemic.

What followed was a crash course in how, when Washington decides in a week how to unleash $2.2 trillion into the economy, a lot can go wrong. Millions of businesses around the country have applied for loans under the popular $659 billion Paycheck Protection Program, and the effort may prove to be instrumental in keeping many of them afloat. But the government’s hurried decision to funnel the small-business loans through commercial banks has proven inefficient and inequitable. Many large banks administering the loans favored long-time borrowers over smaller shops. Middlemen have capitalized on the chance to claim a piece of the pie as matchmakers between banks and businesses. And unregulated financial-technology firms have attracted would-be borrowers and left them waiting.

Fournier was one of thousands of small business owners who applied for PPP money, and quickly found themselves way outside their comfort zone. Fournier, who is more familiar with vintage manuscripts than loan documents, feels like the process was needlessly opaque and cumbersome. “I’m a humanities guy who likes corduroy and cool, old books. I’m not your brightest diamond in terms of the financial futures market,” Fournier says. “But I’m not stupid, either.”

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It was Fournier’s accountant who urged him to apply for a PPP loan to keep his business running. He rushed to get his 2019 taxes done to back up his application. Then he had to find someone who would lend him the cash. Though the program is managed by the federal Small Business Administration, the loans have been administered through commercial banks. But Citi, Fournier’s existing bank, had never lent him money before. After meeting with a Citi banker in person, Fournier didn’t think the bank would approve his loan. He started looking for other options, but lenders weren’t rushing forward to invest in rare manuscript depots as the rest of the economy lurched to a halt.

Frustrated, Fournier turned to the Internet for help finding a way to access the Small Business Administration loans. On April 12, he went to his browser and made his way to SBA.com — a private site that is not the official government’s site of SBA.gov. At the time, the site looked like a government one, and Fournier says he thought it was some sort of a public-private hybrid that was helping to get the money flowing.

He wasn’t alone. SBA.gov and SBA.com, the website for Texas-based consulting firm Small Business Advice, have been widely confused in the last two months – so much so that Treasury Secretary Steve Mnuchin himself referred loan seekers to the dot-com address at an April 2 White House briefing. (The White House has since fixed the reference on the transcript.)

Small Business Advice has had the site for years, not just since Mnuchin flubbed the address. But thousands of businesses have handed over their information to SBA.com since, which in turn sells that list to lenders of all stripes. The phone number listed for the consultancy does not have an option to leave messages, and the company did not respond to a message sent through its website.

“I may not be the most business savvy person always but I’m usually pretty good a spotting a Nigerian scam email,” Fournier says. “Whether it was a combination of the anxiety of being shut out from [the Paycheck Protection Program] by a traditional lender or thinking about mounting bills and financial pressure, I clicked through.”

On April 13, Fournier applied through SBA.com. The next day, the New York Attorney General issued a cease-and-desist order to the web site for misleading consumers. SBA.com has since changed its language and offers an upfront disclosure that it isn’t the SBA that borrowers were probably looking for.

Once at the dot-com site, Fournier entered a network of referrals. SBA.com connected Fournier with Lendio, a Utah-based company that acts as a clearinghouse for all types of business loans. Since the PPP launched on April 3, some 120,000 small businesses have come through the Lendio portal. Just as some banks were overwhelmed with interest from loan applicants, others were left with cash to loan with no takers. Those banks — 300 and counting — were willing to pay Lendio to help connect them with small businesses looking for PPP loans.

On April 15, Lendio’s platform sent Fournier an email telling him his application had been tentatively approved. Lendio in turn connected Fournier — and at least 30,000 other PPP loan applicants — with Ready Capital, a New York-based fintech firm. But because Ready Capital is not a traditional bank, it is ineligible to access the cash loosened up by the Federal Reserve to help borrowers, and the firm had to find other sources of cash to disperse to borrowers. Ready Capital has approved about $3 billion in Paycheck Protection Program loans in total, but only about $1.3 billion has gone out the door to businesses by May 1. Of that, $1 billion was through Pennsylvania-based Customers Bank. A company representative says the company had moved $2.1 billion by May 8.

Fournier completed the paperwork with Ready Capital and one of its subsidiaries, Knight Capital Funding. “I kind of thought, well, maybe I’ll get some funding in a day or two, or a week maybe,” he says. That was in mid-April. Then, things went silent. Though the Small Business Administration requires lenders fund PPP loans within 10 days, Fournier’s first loan through Knight Capital Funding missed that deadline and went back into the Ready Capital pile of applicants looking for lenders.

Eventually, Fournier decided to try another route, through PayPal, which was also offering non-bank-based loans. But because the Small Business Administration already had a record of his application from Ready Capital and had assigned his business an identification number, Fournier couldn’t apply with another lender. Washington was trying to prevent the same business from taking multiple loans, but in effect he was trapped in Ready Capital’s system that was at best sluggish and at worst over-extended.

“A fairly small organization in the fintech sector had just decided, ‘We are going to go for it, we are going unhinge our jaw and just try to swallow as much of the market as we possibly can,’” Fournier says of Ready Capital.

Ready Capital declined to comment. But Lendio CEO Brock Blake says his work with SBA.com and Ready Capital was an honest attempt to connect consumers and banks. “With [the Paycheck Protection Program] you realize that this pandemic came on overnight. Millions of small business owners are out of business. They announced the CARES Act on March 27. They said, by April 3 — in one week — this is going live,” Blake says. “In one week, you’re going from no one has ever heard of a PPP loan to every business in America is desperately trying to get a PPP loan overnight. A bank has never done a PPP loan. We’ve never done a PPP loan. … Everyone in America is doing it from scratch.”

There’s no telling just how many borrowers got left in a lurch trying to secure PPP loans from non-traditional lenders like Ready Capital, PayPal or Intuit QuickBooks. They operate beyond the scope of traditional bank regulators. Hard numbers are tough to come by, but given Lendio sent at least 30,000 applicants to Ready Capital alone, it’s not unreasonable to say a number of would-be borrowers are probably still in limbo as their businesses spiral.

Compounding matters even more, updated government guidance sent to lenders on April 15 added a new requirement for companies like Fournier’s: a copy of their IRS Schedule C form showing profits or losses. Applications submitted before April 15 without Schedule C forms were suddenly deemed incomplete.

“The process clearly has not gone smoothly. But we need to give a little bit of a break because the speed by which this money was going out the door has never been done before. Some of this was inevitable because we are building the car as we are driving it,” says Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget. “The goal of the CARES Act was to get money out as fast as humanly possible. The money is now flowing.”

After weeks of obsessively checking his inbox and voicemail, Fournier woke up on May 8 to an alert that Customers Bank had funded the Ready Capital-approved loan. The next day, Ready Capital sent him a note “to take a moment and acknowledge that disbursement of your loan proceeds took longer than anticipated and apologize for any hardship this may have caused.”

Ready Capital said the money should be deposited by the end of the day on May 11, and it was. “I wasn’t sure if it was going to happen,” Fournier says. In the end, Fournier got his loan of $15,000, which he can now use to cover costs like the Internet connection he needs to chat with potential clients online. For Fournier, there was a happy ending. Thousands of others may not be so lucky.

Please send tips, leads, and stories from the frontlines to virus@time.com.

Write to Philip Elliott at philip.elliott@time.com.

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