The Small Enterprise Administration’s Gaffes Are Now Her Job to Repair

Isabella Casillas Guzman, President Biden’s option to run the Small Enterprise Administration, inherited a portfolio of practically $1 trillion in emergency assist and an company affected by controversy when she took over in March. She has been sprinting from disaster to disaster ever since.

Some new packages have been mired in delays and glitches, whereas the S.B.A.’s best-known pandemic aid effort, the Paycheck Safety Program, practically ran out of cash for its loans this month, complicated lenders and stranding hundreds of thousands of debtors. Offended enterprise homeowners have deluged the company with criticism and complaints.

Now, it’s Ms. Guzman’s job to show the ship round. “It’s the biggest S.B.A. portfolio we’ve ever had, and clearly there’s going to must be some modifications in how we do enterprise,” she mentioned in a latest interview.

When the coronavirus disaster struck and the economic system went right into a free fall final 12 months, Congress and the Trump administration pushed the Small Enterprise Administration to the forefront, placing it answerable for enormous sums of aid cash and complex new packages.

It’s by far the smallest cabinet-level company, with an annual working price range that’s sometimes lower than half of what the Protection Division spends in a day. It was lengthy seen throughout the authorities as a sleepy backwater.

However when the pandemic despatched unemployment claims hovering, Congress responded with an unprecedented plan: Give companies cash to maintain their staff employed. Simply seven days after President Donald J. Trump signed the $2.2 trillion CARES Act in late March 2020, the Small Enterprise Administration started accepting functions for the Paycheck Safety Program.

Company workers describe a blurry month of round the clock work to handle this system’s launch and early days. The company’s 68 district workplaces, which usually subject a number of hundred inquiries per week, obtained 12,000 telephone calls a day from determined enterprise homeowners. A rotating group of a dozen folks camped in an advert hoc warfare room on the largely empty headquarters to put in writing this system’s guidelines and revamp expertise methods to deal with the onslaught of functions.

Regardless of a number of velocity bumps — together with complicated, often-revised mortgage phrases and several other technical meltdowns — this system loved some success. Hundreds of thousands of enterprise homeowners credit score it with serving to them survive the pandemic and maintain extra staff employed.

Economists are skeptical about whether or not this system’s outcomes justify its enormous price, however Mr. Trump and Mr. Biden each embraced the hassle as a centerpiece of their financial rescue plans. Because the pandemic stretched on and the economic system plunged right into a recession, the Paycheck Safety Program morphed into the biggest enterprise bailout in American historical past. Greater than eight million firms obtained forgivable loans, totaling $788 billion — practically as a lot cash as the federal government spent on its three rounds of direct payments to taxpayers.

However there have been pitfalls, a few of which is able to take years to unravel. Fraud is a serious concern. Hundreds of individuals took benefit of the rushed program’s minimal documentation necessities and sought illicit loans, in accordance with prosecutors, to fund playing sprees, Lamborghinis, luxury watches, an alpaca farm and a Medicare fraud scheme. The Justice Division has charged tons of of individuals with stealing more than $440 million, and scores of federal investigations are energetic. (Throughout her affirmation listening to, Ms. Guzman promised that she would “prioritize the discount of fraud, waste and abuse.”)

There have been different issues. Feminine and minority enterprise homeowners had been disproportionately neglected of the aid effort. A final-minute try by Mr. Biden to make this system extra beneficiant for solo enterprise homeowners got here too late to assist lots of them. This month, a brand new emergency popped up: This system ran wanting cash and abruptly closed to most new candidates.

“There was no warning,” Toby Scammell, the chief government of Womply, an organization that helps debtors get loans, mentioned of the newest debacle. His firm alone has greater than 1.6 million candidates caught in limbo.

The Paycheck Safety Program is much from the company’s solely problem. It’s additionally managing a fancy and evolving system of low-interest catastrophe loans of as much as $500,000 and new grant funds, created by Congress, for 2 of the hardest-hit industries: the Shuttered Venue Operators Grant for live-event companies and the Restaurant Revitalization Fund. (The resort business is pushing for its personal model.)

Every required the company to create insurance policies and expertise methods from scratch. The venue program has been particularly rocky. On its scheduled begin day, in early April, the applying system fully failed, leaving determined candidates hitting refresh and counting on social media posts for info and updates.

“I turned to my affiliate director and mentioned, ‘I figured one thing like this is able to occur,’” mentioned Chris Zacher, the manager director of Levitt Pavilion, a nonprofit performing arts middle in Denver. The Small Enterprise Administration revived the system three weeks later and has obtained 12,200 functions, nevertheless it doesn’t anticipate awarding grants till late Could.

Folks decrease within the tiered precedence queue, together with Mr. Zacher, concern that even when their declare is accredited, they gained’t see a test till June or July — a serious hurdle for venues making an attempt to plan their summer time and fall seasons.

“It’s maddening,” Mr. Zacher mentioned. “A program that’s supposed to assist save indie venues is placing us at an obstacle due to all these delays.”

Ms. Guzman, 51, hears these criticisms relentlessly — the response threads to her company’s social media posts have turned into primal screams of pain. (“I SERIOUSLY CANNOT TAKE THIS WITH SBA ANY LONGER” is one of the milder replies.) She mentioned she understood the urgency.

“It’s positively unprecedented — throughout the board, throughout the nation — and we’re seeing a number of disasters on the identical time,” she mentioned. “The company is very centered on simply nonetheless responding to catastrophe and implementing this aid as shortly as doable.”

That is Ms. Guzman’s second tour on the Small Enterprise Administration. When President Barack Obama picked Maria Contreras-Candy in 2014 to take over the company, Ms. Guzman went alongside as a senior adviser and deputy chief of employees. The ladies had met within the mid-Nineteen Nineties. Ms. Guzman, a California native with an undergraduate diploma from the College of Pennsylvania’s Wharton Faculty of Enterprise, was employed at 7Up/RC Bottling by Ms. Contreras-Candy, an government there.

“I used to be at all times impressed along with her potential to deal with jobs with steep studying curves — she has a fast grasp of complicated ideas,” Ms. Contreras-Candy mentioned.

Ms. Guzman spent her first stint on the company centered on conventional tasks like its flagship lending program, which usually facilitates round $28 billion a 12 months in loans. This time, the job is radically completely different.

“We’re working carefully to determine alternatives to construct up a robust company to satisfy this demand of scale,” she mentioned. “The S.B.A. must be as entrepreneurial because the small companies we serve. What I actually, actually imply by that’s {that a} extra customer-first method.”

The company is testing a brand new “community navigators” program, which is able to fund native organizations, together with nonprofits and authorities teams, to work carefully with companies owned by folks with disabilities or in underserved rural, minority and immigrant communities. It’s an enlargement of a grass-roots effort by a number of nonprofits to get weak companies entry to Paycheck Safety Program loans.

Ms. Guzman mentioned she was bullish about that effort and different company priorities, like increasing Black and different minority entrepreneurs’ entry to capital — however first, just like the shoppers it serves, the Small Enterprise Administration has to climate the pandemic.

And to do this, it has to cease taking pictures itself within the foot.

The much-awaited second try at opening the Shuttered Venue Operators Grant fund was preceded by one closing debacle: The company introduced — after which, lower than a day earlier than the date, deserted — a plan to open the first-come-first-served fund on a Saturday. For these searching for assist that has not but arrived, the incident felt like one more kick within the enamel.

Ms. Guzman mentioned she was conscious of the necessity for her company to beat its limitations and rebuild its checkered repute.

“This can be a pivotal second in time the place we are able to leverage the curiosity in small enterprise to essentially ship a exceptional company to them,” she mentioned. “I worth being the voice for the 30 million small and progressive start-ups across the nation. What I at all times say to my employees is that I need these companies to really feel just like the giants that they’re in our economic system.”