Though most of them didn’t go into the office last week, thousands of small-business owners in Minnesota were feverishly busy as they rushed to get their share of a $349 billion government bailout aimed at keeping their struggling companies alive.

Some of them have already laid off all or most of their workers as a result of the coronavirus-induced recession. Others are trying to keep going despite the most daunting business conditions they have ever experienced.

No matter what kind of business they are in, however, these owners all share a common goal: to land a forgivable government loan worth up to $10 million. Their biggest concern is that the money will arrive too late or not be enough to help them survive the downturn.

“I’m a pretty smart cookie, but I am banging my head against the wall trying to figure everything out,” said Morgan Baum, owner of a pottery studio in Hutchinson. “I feel like I am racing against the clock. I’m worried the funding is going to run out.”

The federal government opened the spigot Friday, when the U.S. Small Business Administration began accepting applications for the Small Business Paycheck Protection Program, a key component of the $2 trillion federal stimulus package Congress approved last month.

Any company with 500 or fewer employees probably qualifies for a loan through the program, according to interviews with lenders and accountants who have studied the program’s rules. Alfredo Martel, president of the Metropolitan Economic Development Association, or Meda, said there were more than 40,000 applications waiting for approval before the program even opened for business. By Friday afternoon, the agency received applications topping $3 billion.

“We have never experienced anything like this,” said Dan Nygaard, a vice president with BankVista, an approved SBA lender in Minnesota. “Will they run out of money? I don’t know how they wouldn’t. We’re telling our customers to apply as soon as they possibly can.”

To handle the crush of business, the SBA has invited America’s largest banks to participate in the program, which led to complaints by some large institutions that the rules made it unattractive for them to make the loans. Federal officials agreed to double the proposed interest rate on the loans to 1% and take other steps to make it easier for big banks to get approved as SBA lenders.

Under rules hurriedly issued last week, the agency announced it would forgive the entire amount of loans issued through the program as long as businesses used the money on just three things: payroll, utilities and real estate costs. Economists said the terms are an extraordinary concession to business owners, noting that no government loan program has ever come with so few strings.

But there is a significant amount of skepticism about the SBA’s ability to manage this huge flow of money, as well as the lending capacity of its approved borrowers. Some economists also question the approach, saying the government is banking too heavily on a quick economic recovery that may not materialize for many business owners.

Michael Roth, a small-business consultant with Chicago-based Next Street, said the SBA has never processed more than $30 billion in loans in a single year, raising questions about its capacity to handle a much larger job in a shorter time period. Moreover, Roth noted, the agency stumbled badly when it tried rolling out a similar program in 2009 to deal with the last recession. He said it took a full year for that program to ramp up.

“I know the SBA has done a lot to try to remove red tape and remove bureaucracy and make things happen faster,” Roth said. “So that is promising. My biggest concern is their track record. They haven’t been able to do it before, so what makes today different?”

SBA officials declined to make an executive available for an interview, but Administrator Jovita Carranza acknowledged this week there will be “challenges” in implementing the program.

“We continue to work with our federal and private-sector partners to improve capacity as we move forward with assisting small businesses and their employees,” spokeswoman Andrea Roebker said in a written statement. “In response to user feedback, the application site has been streamlined and is easier for those applying.”

Luke Shimp agreed that the SBA has never made borrowing so easy. Shimp, whose family owns the four Red Cow and two Red Rabbit restaurants in the Twin Cities, said he was stunned to see the application covered just two pages.

“I’ve never seen an application that short in my life,” said Shimp, who obtained SBA loans to expand his business in the past 18 years. “It is usually a book. You have to dot all of these I’s and cross all of these T’s, and if you miss something it takes 30 days to fix. All of those elements have been removed.”

In March, Shimp temporarily closed two of his restaurants and furloughed most of his 465 employees. He is still offering takeout service at his remaining outlets, but sales are off 77% and the company is losing $43,000 a week. If he gets his loan, Shimp said, his business should survive. But he’s worried.

“It really depends on the length of the crisis,” Shimp said. “If people are not out shopping and spending money in the next 30 to 45 days, there may need to be further relief down the road.”

The situation is even more dire at Pelican Staffing, an employment agency in north Minneapolis that generated $1.5 million in revenue last year. Owner Ray Memene said nobody is working at his company, which gets most of its work at college cafeterias and stadiums, which have closed down.

“I have zero income coming in right now, so how long can I sustain that?” Memene said.

Though economists say the payroll loan program was tailored for businesses like his, Memene said he isn’t sure he’d qualify.

“A lot of small businesses don’t have a clue of what is going on with these loans or how to go about it,” he said.

Roth said a Next Street survey of small businesses in low-income neighborhoods showed that most of them don’t have enough cash on hand to make it through the recession. He predicted that half of those businesses will close within 90 days if they don’t get immediate help.

Roth said the SBA has historically failed to offer much to minority-owned businesses, with just 5% of prior loans going to black entrepreneurs. Based on Next Street’s research, businesses in low- and moderate-income neighborhoods in the Twin Cities are facing a cash shortfall of $261 million to $639 million.

“The current SBA delivery system is just not going to the businesses that need help the most,” Roth said.

Martel said Meda would love to fill the gap, but he said the nonprofit doesn’t have enough capital to make more than $250,000 in additional loans.

Louis Johnston, an economic historian at the College of St. Benedict and St. John’s University, said the government picked the wrong approach to helping companies survive the coronavirus. He noted that to qualify for loan forgiveness, a business must restore full-time employment to the level it was before the crisis by June 30.

“I’m afraid we’re using the wrong tool,” Johnson said. “This is like a natural disaster. If your restaurant got blown over by a tornado, offering someone a forgivable loan that depends on everybody working doesn’t really help you. Because what you have to do is rebuild. You need a loan program to deal with those consequences.”

Some business owners said they are nervous about the rehiring provisions, saying they don’t want to take on more debt than they have to in case the recovery takes longer than expected.

Adam Lerner, CEO of Lerner Publishing Group, said he would like to borrow $1 million to $2 million so he can avoid laying off any of his 100 or so employees. So far, he noted, the celebrated publisher of children’s books has not been forced to furlough anybody.

“That’s why we hope to get it,” Lerner said. “It will buy us a quarter to figure things out and get us through these very uncertain times.”

But Lerner is concerned about what happens if the recession lasts longer and his business, and others, are suddenly asked to repay some or all of their loans.

“That is probably not sustainable for most companies,” Lerner said “So either the government is going to have to extend the program or loosen the regulations. Everyone knows the crisis is going to go beyond the second quarter. You can’t just snap your fingers and get business up and running.”