I knew you wouldn't get it. Existing UC is not set up to and cannot possibly handle paying out to the millions who would jump on the system and stay there, sucking it dry. The program would have to have new taxes imposed on the general public, new bureaucracies to manage the millions more that would be on the program, and new enforcement. Hint, that means it's a brand new welfare program because it's not UC any more. UC couldn't handle it, and it simply doesn't matter how many times you stomp your feet and repeat that it will. It just won't. As for why anyone would be poor, there are those who stay in MW jobs or refuse to work now and take whatever they can get because they'd rather not have the responsibility that comes with supporting themselves. That's human nature for many people. As for circulation, first you are cutting circulation because you're going to have to impose a new general tax, then you're not going to get the same multiplier as UC because it's not UC any more. You don't seem to realize that taking a trillion out of the economy to get back a few billion in new taxes is not a good trade.
That is just You. The existing program could be funded like our alleged wars on crime, drugs, and terror which have a worse multiplier. People on unemployment compensation would be spending that money in their local economies and generating local general taxes while doing it. We could end our alleged wars on crime, drugs and terror and use that money to fund unemployment compensation.
Any "new" taxes could be general taxes not direct taxes and less burdensome as a result. And, that also means capital has to circulate and engender a multiplier to collect that revenue. With a multiplier of two, it means that for every one hundred dollars spent, two hundred dollars of economic activity is generated. General taxes would come from that additional economic activity.
Funding could also come from financial instruments such as bond sales. There is no reason why people could not make money funding that program under Capitalism. Enough people on unemployment compensation could easily generate enough in general taxes to cover the interest payments.
How would local small businesses be worse off with more people spending money?