Stanford professor Dave Dodson criticized financial relief measures adopted by the federal government during the coronavirus pandemic.

With U.S. financial markets reeling after a slew of major companies posted worrisome first-quarter earnings, many small businesses in the United States are struggling to stay afloat as state lawmakers across the country extend shelter-in-place orders to slow the spread of the coronavirus.

During an appearance on CNBC's Squawk Box Wednesday morning, Dodson lamented aspects of the Paycheck Protection Program, which he argued was formulated without considering the real needs of many small businesses in the U.S.

"While Washington, D.C., is debating whose signature gets to be at the bottom of the check and who gets to be in the blue ribbon committee, time is running out," Dodson said. "This week, small businesses reported that 28% of them, 28% of them, said they will not make it to the end of the month. Meanwhile, we have this massive disconnect between what's happening in Washington, D.C., and what's being said in Washington, D.C., and what's happening out on Main Street out in regular Middle America."

The Paycheck Protection Program was part of the $2 trillion economic relief bill passed by Congress and signed by President Trump last month. It is a $350 billion effort allocating eight weeks of cash flow to qualifying small businesses so they can pay employees and avoid layoffs.

But Dodson, who is also an adviser and an investor to small businesses, stressed that up to 30% of small businesses will not apply for the program because of "red tape, they don't trust the government, and the program doesn't line up with their expenses."

"Most small businesses have two weeks' supply of cash for their expenses," Dodson added. "They don't have access to credit markets, they can't issue bonds, they can't issue stock, and so, we've got big business advising the U.S. government on how to handle small business, and it's not working."

Dodson said he was aware of 31 small companies that applied on the first day for the program, but only one had received assistance. He also said that many working-class people are better off taking unemployment benefits than continuing to work when the shelter-in-place bans are lifted.

"No one in Washington, D.C., or in Manhattan bothered to ask what's happening in Middle America," Dodson said. "Depending upon the state, if you make around $50,000 a year or less, you're better off taking the unemployment benefits, which is insane. "