Billionaire entrepreneur Marc Cuban said on Monday that the recently launched small business loan program faces challenges that could impact businesses’ long-term prospects.
“The banks are playing themselves. These are the banks and they are trying to determine if the credits are good and that leads to a lot of small businesses being left behind,” Cuban said on “Scream Box. ”
“We’re at an inflection point” to get money into the system for businesses of all sizes, he said.
Cuban, owner of the NBA’s The Dallas Mavericks, said the companies he has invested in as part of “Shark Tank” have encountered difficulty in applying for loans. Cuban said some banks questioned a company’s gross margin and therefore were not sure whether to grant the loan.
“I tried to call the banks and say ‘No, that’s not the point behind the [Paycheck Protection Program] to lend.’ That’s not what it’s about. It’s a government guarantee and it’s supposed to turn into a subsidy if you keep all of your employees, ”Cuban said.
Cuban said the banks “put all these obstacles in place” that were not supposed to be part of the program, which was established by the government. $ 2 trillion coronavirus relief package which was adopted at the end of March.
“Until we get over this friction, there will be a lot of problems and there will be a lot of people being made redundant and a lot of businesses going out of business,” he added.
While there was initially $ 350 billion set aside for the small business lending program, Treasury Secretary Steven Mnuchin said the the government will provide more funding, if necessary.
The government turned to banks and other financial institutions such as credit unions to help distribute loans to small businesses. In addition, fintech players such as Pay Pal and Intuit QuickBooks said on Friday that they were approval granted to participate in the Small Business Administration.
Cuban said he hopes the distribution of PPP loans will improve like what happened after the fall. launch of care exchanges of the Affordable Care Act.
“I hope it will be the same here, that we get another slice of money and the second installment will have clearer rules and the banks will recognize that this is not a credit environment. typical where you’re supposed to analyze each request like it was a new loan, ”Cuban said.
“This is a rushed environment where we need to put money in the hands of small businesses so that they can retain their employees,” he said.
Cuban has been particularly outspoken during the coronavirus pandemic. He pressured Washington lawmakers to prioritize workers in the legislation on economic recovery. He argued that any business that receives government assistance under such legislation should be barred from buy back his shares.
Cuban also advised against business leaders sending their employees back to office too early, warning that it could “define their brand for decades.”
– Disclosure: CNBC owns the exclusive rights to the off-grid cable for “Shark aquarium“, of which Mark Cuban is co-host.