When the Covid pandemic shut down his entertainment booking agency, Sleeping Giant Music, in 2020, Freddie Harb faced financial ruin. With concerts and live events largely on hold, the San Diego businessman said, he turned to the U.S. Small Business Administration in case he needed help making payroll. Like nearly 4 million other small-business owners, he received what’s called an “economic injury disaster loan.”

But when Harb repeatedly tried to repay the loan, records show, his payments were never taken by the agency. Three years later, he learned he was in default and his business was in collections.

“I wish I never got that loan,” Harb said in an interview. “It’s been a total nightmare.”

Navigating the SBA’s Covid disaster loan program has become similarly agonizing for several other small-business owners who, like Harb, say their loans were wrongly deemed delinquent or in default as a result of the agency’s own internal accounting and processing errors.

“It’s a complete s— show,” said Trevor Curran, who co-runs Aurora Consulting, a Connecticut-based firm that has helped dozens of small-business owners manage and obtain SBA loans. “Dysfunctional internal systems, incompetent processing, bad communications.”

Along with the added stress and wasted time trying to fix mistakes, several business owners accused of default have faced real financial consequences due to the agency’s alleged blunders, including garnished or withheld Social Security checks and tax refunds, intercepted Medicaid payments, and files sent to private collectors who’ve flagged delinquencies on credit reports, Curran said.