As the government prepared on Thursday to start taking applications for a $16 billion relief fund for music clubs, theaters and other live event businesses, thousands of desperate applicants waited eagerly to submit their paperwork right at noon, when the system was scheduled to open.

And then they waited. And waited. Nearly four hours later, the system was still not working at all, sending applicants into spasms of anxiety.

“This is an absolute disaster,” Eric Sosa, the owner of C’mon Everybody, a club in Brooklyn, tweeted at the agency. In social media forums and Zoom calls, frustrated applicants banded together to vent and share their anger.

The Small Business Administration, which runs the initiative, the Shuttered Venue Operators Grant program, attributed the problems to “a technical issue” that it said it was working to address.

the same thing happened again, weeks later, when a new round of funding became available.

Applicants for the grant program were incredulous that the agency was not better prepared — especially because the funds are to be distributed on a first-come, first-served basis. Those who get their applications in early have the best chance of getting aid before the money runs out.

“It pits venues against each other because we’re all mad-dashing for this,” Mr. Sosa said in an interview. “And it shouldn’t be that way. We’re all a community.”

For businesses like Crowbar, a music club in Tampa, Fla., getting a grant is a matter of survival. Tom DeGeorge, Crowbar’s primary owner, took out more than $200,000 in personal loans to keep the business afloat after it shut down last year, including one using its liquor license as collateral.

More than a year later, the club has reopened with a smattering of events at reduced capacities, but the business still operates in the red, Mr. DeGeorge said in an interview.

months of lobbying by an ad hoc coalition of music venues and other groups that warned of the loss of an entire sector of the arts economy.

For music venues in particular, the last year has been a scramble to remain afloat, with the proprietors of local clubs running crowdfunding campaigns, selling T-shirts and racking their brains for any creative way to raise funds. For the holidays, the Subterranean club in Chicago, for example, agreed to place the names of patrons on its marquee for donations of $250 or more.

“It’s been the busiest year,” Robert Gomez, the primary owner of Subterranean, said in an interview. “But it’s all been about, ‘Where am I going to get funding from?’”

sent out an alert warning of “serious concerns” with the program’s waste and fraud controls. The Small Business Administration’s current audit plan “exposes billions of dollars to potential misuse of funds,” the inspector general wrote in a report.

Successful applicants will receive a grant equal to 45 percent of their gross earned revenue from 2019, up to $10 million. Those who lost 90 percent of their revenue (compared to the prior year) after the coronavirus pandemic took hold will have a 14-day priority window for receiving the money, followed by another 14-day period for those who lost 70 percent or more. If any funds remain after that, they will then go to applicants who had a 25 percent sales loss in at least one quarter of 2020. Venues owned by large corporations, like Live Nation or AEG, are not eligible.

The application process is extensive, with detailed questions about venues’ budgets, staff and equipment.

“They want to make sure you’re not just setting up a piano in the corner of an Italian restaurant and calling yourself a music venue,” said Blayne Tucker, a lawyer for several music spaces in Texas.