HARRISBURG, Pa. — In March, less than a month into the coronavirus shutdown, Gov. Tom Wolf launched a low-interest loan program as a lifeline to “provide a little peace of mind to hundreds of small business owners and their employees.”

All $61 million was gone in less than a week, as business owners across the state raced to apply. But in the rush to stand up the new program and get relief flowing, no requirements were put in place to ensure businesses had a fair shot at the money — and many did not.

Of the 761 approved loans, only 41 — or 5% — went to minority-owned businesses, according to new numbers released by state economic development officials.

The results are consistent with an earlier review of the program by Spotlight PA that found it relied on a patchwork of local nonprofits spread unevenly across the state, putting some counties and the businesses located there at a serious disadvantage.

Now, as the economic fallout of six months of business closures, reopenings, and new restrictions comes into sharper focus, Pennsylvania is trying again.

A new $200 million grant program is specifically targeted at the smallest and most vulnerable businesses, many of which were left behind in the frantic rush for state and federal aid. Half of that money has been set aside for minority-owned businesses, which have been hit the hardest by the economic fallout of the pandemic, research shows.

“This is going in a completely different direction, trying to get deep into the heart of our neighborhoods,” said Sen. Vincent Hughes (D., Philadelphia), who helped design the new program. “We wanted to get through the noise of always hearing about loans and that loan conversation has been relatively negative.”

Business owners can only fill out the application online, which could pose a challenge for those without reliable internet access. But keeping everything digital makes it easier to process a large volume of applications quickly and standardize the scoring process, said Amanda High, director of strategic initiatives at the Reinvestment Fund, another CDFI.

The applications themselves are processed and reviewed by a third-party — online lending company Lendistry — not by the CDFIs, which eliminates the possibility that some organizations might have more resources or capacity to handle applications than others.

That was a problem with the first loan program, which was administered by a different set of nonprofits on a first-come, first-served basis. That meant they were racing against each other to finish as many applications as possible before money ran out.

Some counties had several of these nonprofits, while others had only one, or were covered by larger, regional organizations. A bureaucratic snafu left Montgomery County — the third-largest in the state and the first where businesses were urged to close because of the coronavirus — without one at all.

As a result, just three businesses there received loans — the same number as in Elk County, which has a fraction of the population. In Erie County, five businesses received loans. In neighboring Crawford County, which is three times smaller, 18 were approved.

In six days, the money was gone, and the rush left many businesses in the dust.

“I never expected it to be that fast,” said Joe Lanich, one of the owners of The Laughing Owl, a specialty printing shop in McKean County that received a $100,000 loan.

Lanich, whose company employs five people, has since applied for the new grant program.

“I like that they stepped back like, ‘Let’s do this at a pace that more businesses can operate at,’” said Lanich. “I’ve seen some other programs pop up and they’re open and shut in like three minutes.”

The new program also aims to reach those who may have been left out of the federal government’s major effort to help small businesses, the $600 billion Paycheck Protection Program, which offers loans that can be forgiven under certain circumstances.

The program was designed to get money out quickly, rather than helping the businesses struggling the most, leading to public outcry over some publicly traded companies and major chains receiving loans, while many minority-owned businesses were shut out.

Although the Small Business Administration was supposed to tell banks to prioritize companies “owned by economically disadvantaged individuals,” as well as those in “underserved and rural markets,” a report by the agency’s Inspector General found that it failed to do so.

The SBA also failed to collect demographic information from applicants, the report found, making it almost impossible to analyze racial disparities in the program.

But, according to a survey commissioned by two civil rights groups, many Black and Latinx business owners struggled to get federal relief, with only 12% of those who applied for aid from the SBA saying they had received the full amount they had asked for.

Spotlight PA is an independent, non-partisan newsroom powered by The Philadelphia Inquirer in partnership with PennLive/The Patriot-News and other news organizations across Pennsylvania. Sign up for our free weekly newsletter.