CNBC's Jim Cramer on Tuesday criticized banks for approving small business loans to larger companies that were not meant to benefit from the federal Paycheck Protection Program.

"I just want to know who made the bad loans. Somebody did," Cramer said on "Squawk on the Street," suggesting the names of the banks who facilitated the loans should be made public.

The PPP, approved by Congress last month as part of the $2.2 trillion coronavirus rescue package, was intended to help small businesses pay workers during the pandemic. But it ran out of its initial $349 billion funding allotment in less than two weeks, and public companies like Shake Shack and AutoNation and private entities such as the NBA's Los Angeles Lakers were found to have received loans through the program.

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The second round of the Small Business Administration's (SBA) emergency coronavirus lending program is struggling to bounce back from a disastrous start.

A crush of applications locked out thousands of furious lenders and desperate business owners on Monday, requiring many applicants to give it another go on Tuesday after waiting weeks for the new pool of money.

Small businesses have flooded banks, credit unions and financial firms across the country to secure forgivable loans through the SBA's Paycheck Protection Program (PPP) after President Trump and Congress approved an additional $310 billion in funding last week.

The original $349 billion allocated for PPP loans ran dry in less than two weeks, leaving thousands of businesses without relief as more states extended coronavirus restrictions.

The backlog of PPP requests that built up during the weeks without funding crashed the SBA's beleaguered processing system, preventing thousands of applicants from securing government assistance.

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Makeshift distribution centers, furloughed employees, and countless frustrations: This is the unfortunate reality for Christina Stembel, the founder and chief executive officer of San Francisco-based startup Farmgirl Flowers.

Farmgirl Flowers was founded in 2010. At the time, Stembel used her own savings account and a cash-back credit card to cover business expenses and get her business off the ground.

"I had this idea about how I could disrupt this very large floral industry and create something that I would want to receive myself as a consumer," Stembel told Business Insider. "We were the first company in that space to embrace the idea that less is more."

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The Small Business Administration on Wednesday will temporarily allow only the smallest financial institutions to access the small business coronavirus relief program, known as the Paycheck Protection Program.

The move to restrict access comes after concerns that the smallest of businesses, and particularly those owned by people of color, were shut out of the first round of the program, which ran out of money in 13 days.

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Many black-owned small businesses are having trouble accessing the government's emergency Paycheck Protection Program loans, despite a fresh round of CARES Act funding that includes $60 billion in set-asides for minority and other underserved borrowers.

The coronavirus loan program, executed by the Small Business Administration, offers up to $10 million in loans per customer that can turn into grants that don't have to be repaid if certain rules are followed, such as using most of it for payroll, plus rent and utilities.

The program has been marred by administrative glitches and controversies since its hasty midnight launch on April 2. Funds effectively ran out in minutes as well-resourced companies — with the help of their bankers — muscled their way to the front, while mom-and-pop businesses were left wondering whether they even had a place in line.

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