Isabella Casillas Guzman, President Biden’s choice to run the Small Business Administration, inherited a portfolio of nearly $1 trillion in emergency aid and an agency plagued by controversy when she took over in March. She has been sprinting from crisis to crisis ever since.
Some new programs have been mired in delays and glitches, while the S.B.A.’s best-known pandemic relief effort, the Paycheck Protection Program, nearly ran out of money for its loans this month, confusing lenders and stranding millions of borrowers. Angry business owners have deluged the agency with criticism and complaints.
Now, it’s Ms. Guzman’s job to turn the ship around. “It’s the largest S.B.A. portfolio we’ve ever had, and clearly there’s going to need to be some changes in how we do business,” she said in a recent interview.
When the coronavirus crisis struck and the economy went into a free fall last year, Congress and the Trump administration pushed the Small Business Administration to the forefront, putting it in charge of huge sums of relief money and complicated new programs.
confusing, often-revised loan terms and several technical meltdowns — the program enjoyed some success. Millions of business owners credit it with helping them survive the pandemic and keep more workers employed.
Economists are skeptical about whether the program’s results justify its huge cost, but Mr. Trump and Mr. Biden both embraced the effort as a centerpiece of their economic rescue plans. As the pandemic stretched on and the economy plunged into a recession, the Paycheck Protection Program morphed into the largest business bailout in American history. More than eight million companies got forgivable loans, totaling $788 billion — nearly as much money as the government spent on its three rounds of direct payments to taxpayers.
Fraud is a major concern. Thousands of people took advantage of the rushed program’s minimal documentation requirements and sought illicit loans, according to prosecutors, to fund gambling sprees, Lamborghinis, luxury watches, an alpaca farm and a Medicare fraud scheme. The Justice Department has charged hundreds of people with stealing more than $440 million, and scores of federal investigations are active. (During her confirmation hearing, Ms. Guzman promised that she would “prioritize the reduction of fraud, waste and abuse.”)
There were other problems. Female and minority business owners were disproportionately left out of the relief effort. A last-minute attempt by Mr. Biden to make the program more generous for solo business owners came too late to help many of them. This month, a new emergency popped up: The program ran short of money and abruptly closed to most new applicants.
“There was no warning,” Toby Scammell, the chief executive of Womply, a company that helps borrowers get loans, said of the latest debacle. His company alone has more than 1.6 million applicants caught in limbo.