Billionaire businessman Mark Cuban is explaining why small businesses will need more stimulus packages to fully recover from the coronavirus economic hit.
“The Shark Tank” co-host appeared on MSNBC Tuesday evening, where he was asked if Texas Gov. Greg Abbot’s (R) reopening approach was suitable.
“It’s kind of showmanship,” Cuban said.
According to Cuban, operating at 25% capacity — per multiple states’ reopening guidelines — may prove to be far more difficult than operating at full capacity for some businesses.
Cuban continued, “The reality is a retail store trying to open up or any large venue trying to open, whether it’s a small theater, whatever it may be, when you to restrict it to 25%, it’s going to cost you more to open up than anything you’d actually bring in revenue.”
See Cuban’s interview below:
Based on the current structure of the Payment Protection Program (PPP) and the social distancing guidelines, Cuban offered more detail explaining why small retail businesses will likely end up losing more than they gain. With only 25% of revenue coming in, small businesses may not profit.
“What we’re really missing, because demand is going to be so much less than it was before, just trying to follow some of these guidelines, these small businesses are going to lose more money by opening up for retail,” Cuban explained.
He highlighted concerns employees may be facing:
“Nobody is giving them any help. Nobody is giving them any guidance. There should be support there. And again, nobody is standing up for employees. … What are employees going to do if they feel the pressure to come to work, but they don’t feel it’s safe? Who do they turn to?”
Cuban also warned that the federal government will likely need to pass more stimulus packages for small businesses as different sectors of the economy continue to reopen.
“Realize that we’ve done this twice now. We’re going have to do it many more times because this is not enough,” Cuban said.
Another issue Cuban expressed concern about is the “Catch-22” many small businesses are facing — paying employees for eight full weeks without the ability to operate.
“The Catch-22 for a lot of these small companies is that they going to be able to pay their employees for eight weeks but chances are they aren’t going to be able to open. So now they’re paying employees to do nothing. Their employees, where they can get unemployment insurance, are actually getting paid more on unemployment. So they can’t get them to come back a lot.”
Melber also noted criticism the federal government faced for its handling of the 2008 recession. Instead of focusing on small businesses, Melber noted that the bulk of that funding went to big banks and Wall Street.
The Dallas Mavericks owner is offering his take on what could be a solid solution to avoid a repeat of that.
“We have to sit down and have somebody who truly understands small businesses, who truly understands the predicament small businesses and their employees are in and just look at the actual numbers. Having to go through banks when you’re in a rush to get money in people’s hands, I understand why they did that. But now that we’ve been through this twice, let’s optimize it and get it right.”
Cuban’s remarks come after Treasury Secretary Steven Mnuchin’s warning to large-scale businesses.
He warned that there would be consequences for certain businesses that accepted loan proceeds intended for small businesses with less than 500 employees.