Billionaire entrepreneur Mark Cuban, owner of the Dallas Mavericks and investor on the reality show “Shark Tank,” said the Paycheck Protection Program (PPP) is moving too slow to help businesses struggling amid the coronavirus crisis, according to CNBC.
“Banks are playing themselves,” Cuban said on “Squawk Box. “They’re being banks and they’re trying to determine if the credits are good, and that’s leading to a lot of small businesses that are left out in the cold. We are at an inflection point” to get money to businesses.
Cuban knows firsthand that businesses are struggling to get loans; the firms he has invested in as part of “Shark Tank” have hit walls. Cuban said lenders have asked questions about a business’s gross margin and then got cold feet about making the loan.
“I’ve tried to call the banks and say, ‘No, that’s not the point behind the [Paycheck Protection Program] loan,’” Cuban said. “This is not about that. This is a guarantee by the government, and this is supposed to turn into a grant if you retain all your employees.”
Banks have “implemented all these hurdles” that were not intended to be part of the stimulus program, Cuban said.
The PPP was launched as part of the government’s $2 trillion coronavirus relief package passed March 27.
“Until we get through that friction, there’s going to be a lot of issues, and there’s going to be a lot of people laid off and a lot of companies that go out of business,” he added.
Cuban said he is optimistic that the PPP loan process will get better over time. He compared it to the rocky start of the Affordable Care Act and related healthcare exchanges.
“Hopefully it will be the same way here, that we’ll get another tranche of money and the second tranche will have clearer rules and banks will recognize that this is not a typical credit environment where you’re supposed to analyze each application as it was a new loan,” Cuban said.
The coronavirus relief package included $350 billion set aside for forgivable small- to medium-sized business (SMB) loans. The government will look into approving additional funding if it is needed, Treasury Secretary Steven Mnuchin has said.
Despite the Small Business Administration’s PPP rescue relief effort being underway, it hasn’t changed how many SMBs feel about their chances of surviving the economic impact of the pandemic. More than half of some 700 SMBs that PYMNTS recently surveyed said they either don't think they'll survive the COVID-related shutdown or aren't sure whether they will or not. You can read more of our survey results here.