The coronavirus crisis is putting added pressure on small business, 29 percent of which prior were unprofitable and 47 percent had two weeks or less of cash.

WASHINGTON – When Congress passed a $349 billion loan program for small businesses as part of a sweeping economic response to the coronavirus crisis, it was mom-and-pop enterprises like the nail salon Thu Nguyen's family had to temporarily close in Houston that lawmakers had in mind.

But what Thu found as she tried Friday to apply for a government-backed loan of up to $80,000 under the Paycheck Protection Program Congress created was muddling: multiple banks using different forms with no clear answers.

"Our family's super stressed and it is confusing because every (bank) website is different. So we're having to keep track of who's serving their own clients only and who is serving non-clients as well," she told USA TODAY. "It's like the banks don't even know what they're doing."

Thu's frustration was shared with multiple lenders who criticized what they described as the Trump administration's ham-handed rollout of a program considered vital to any hopes of a quick recovery. The economic collapse from the COVID-19 pandemic that's shuttered most retail stores and prompted a stunning 10 million workers to seek unemployment benefits over the past two weeks.

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Fountainhead CEO Chris Hurn said the direct commercial loan company he runs has received more than 8,000 applications from interested business owners. But "vague" and inconsistent guidelines from the Treasury Department and the Small Business Administration – including revisions issued hours before Friday's rollout – added to uncertainly about where to file application loans and which forms to use have frozen his company's ability to process loans.

"We've got failure to launch on this program because so much still remains to be detailed," Hurn told reporters on a conference call Friday afternoon.

The criticism runs in stark contrast to the rosy reports coming from top administration officials touting the progress of the program.

"UPDATE over $1,800,000,000 #PPPloan now processed by @SBAgov mostly all from community banks. Big banks taking in large amounts but not yet submitted in these numbers!" Treasury Secretary Steve Mnuchin tweeted shortly after 2 p.m. Friday.

President Donald Trump joined in, praising the "great job" banks were doing processing loans for small businesses.

Loans up to $10 million are available to some 30 million small businesses across the country who employ no more than 500. The average small business has about five workers, according to the National Federation of Independent Business (NFIB). Nguyen's nail salon, for example, has nine.

The loans would be completely forgiven for eight weeks and covered by the federal taxpayer assuming certain conditions, such as a requirement that at least 75% of the money borrowed went directly to cover payrolls so paychecks would keep flowing even if the store was shuttered.

Hurn said one of the problems is that SBA has not defined how payrolls should be counted and private lenders want to make sure the loans will be guaranteed before they approve them.

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The time it's taking SBA to enroll lenders into the program has also added to delays, said Paul Merski, an executive vice president at the Independent Community Bankers Association. Merski said fewer than half of his members were certified to handle SBA loans before the coronavirus crisis so there's been a scramble to enroll them.

In addition, problems with processing such a massive loan program were bound to lead to some delays, Merski said.

"SBA in an entire year does about $30 billion of lending, so now you're looking at doing $350 billion of loans in a few short weeks," he told USA TODAY. "Just the scale of the number of loans that will be coming is going to cause problems." 

While a crucial cog in the U.S. economy, small businesses are incredibly vulnerable to fluctuating conditions, studies show.

A JP Morgan Chase analysis in September found that 29% of small businesses were unprofitable, and 47% had two weeks or less of cash liquidity. The problem is starker in low-income neighborhoods and communities of color.

The delays in loan processing prompted NFIB President Brad Close to warn that every day of delay could push Main Street retailers further to the brink of collapse.

“We are hearing from far too many small businesses, today, that they are being shut out of the Paycheck Protection Program forgivable loan program," Close said in a statement posted on the organization's Web site. "Small businesses make up half of our economy and employ nearly half of all workers, but this has the potential to be the last straw for many small businesses and their employees."

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