Barbara Corcoran on SBA loans: the execution is "horrendous"
Barbara Corcoran, The Corcoran Group Founder and Shark on ABC’s Shark Tank, joins Yahoo Finance’s Zack Guzman to discuss the latest SBA loan numbers and concerns the program is running out of money.
Video Transcript
ZACK GUZMAN: Right now, we're focusing on the way that the PPP program-- the so-called Paycheck Protection Program, the $350 billion set aside to help small businesses-- is being doled out right now. The latest numbers, $296 billion of that $350 billion has been handed out to small businesses as of about noon Eastern time today. But the "Wall Street Journal" reporting that that could potentially be exhausted. The total $350 billion could be exhausted as soon as today-- perhaps issuing a little bit more credence to Secretary Mnuchin's call to boost funding for the program.
For more on this, I want to bring on our friend and "Shark Tank" host Barbara Corcoran, who joins us again via the Google Hangout here. And, Barbara, when we looked at-- I mean, you talked to us a couple weeks ago about this program and the way that you were worried that half of your "Shark Tank" businesses might not make it through. So what are you seeing kind of in the way that this money is helping small businesses? Have you seen it actually get handed out? And what's your take on the way the program's been laid out here?
BARBARA CORCORAN: Well, I'm going to be worrying a little bit more about my businesses that I believe will make it through, because I've surveyed my companies-- 17 of them on day one applied for that loan. Only one has heard they're getting money this week. No one else has gotten any money, nor have they heard what kind of money is forthcoming. So when I'm hearing about all this money being doled out, I'm wondering who's getting it. I only had one who's getting it later in the week. I think maybe it's been committed and they're rounding out that word. But I'm going to believe it when that money gets into people's hands.
ZACK GUZMAN: I mean, I think that's the big issue here, too, though, right? Because you're talking about companies that are strapped for cash in the short term, and so, I mean, there are problems that they need to deal with now. So waiting a couple of weeks for a check to potentially come down the line might not be good enough. So how does that kind of tie into all this as well?
BARBARA CORCORAN: Well, Zack, you've got that exactly straight. All of these business people actually kept their people on payroll with the anticipation that they were going to get reimbursed with this great SBA loan. So think about it-- they borrowed money on their own, they strapped themselves to their business, and they didn't let anybody go. And now, they're being told oh yeah, we're getting the money. And now today, again, oh, we're going to run out. They haven't heard anything. It's a pretty scary time, even for my most successful businesses, who really put the pedal to the metal and went at risk. And I sure hope they see that money that supposedly is coming through. I just don't know who's getting it.
ZACK GUZMAN: I mean, that's kind of the problem here too-- you're right-- that small businesses were trying to keep employees on the payroll, because that's more effective when you think about it rather than going to the unemployment line and having to deal with that process as well. If you can kind of keep all this, it also ensures a quicker recovery. So a lot of people are agreed on that front. But do you think that there's a sense of maybe being misled here if we're thinking about the government maybe not potentially having enough money to backstop that in the way that they tried to say this would be going out there? I mean, $350 billion sounds like a lot of money, but we've been hearing calls for much more than that, and now potentially, the money not being there for a lot of these businesses across the country.
BARBARA CORCORAN: Well, you know, it's tough-- will we get more money from the government? I suppose so, because it seems like we're just printing money like it's meaningless. But I think everybody was well-intended with the stimulus package, and they made a lot of promises that they intended to keep. I just think the execution of the whole program is pretty horrendous. Even the unemployment insurance-- the idea that they didn't expect that they would have a surge of people applying-- most people who are living hand to mouth right now, the people that were let go aren't getting their checks for three weeks, six weeks, some as late as eight weeks predicted in some of the states. I mean, that's over-promising and under-delivering. In a way, it's more mean than not promising in the first place.
ZACK GUZMAN: No, that's a good point, especially as people are trying to brace for all this and hoping for attempts to make them whole coming through. And we talked about that too-- as stimulus checks start to get passed out here in the US and you think about having a business go under is one thing-- certainly nobody ever wants to see that-- but when we talk about Americans themselves, families, caught in all this too, there's a lot of problems out there and we think about trying to meet mortgage payments, rent payments-- a lot of issues.
And of course, we are getting those stimulus checks, potentially in some instances as much as about $1,700 being given out to maybe single parents with a child. But when you look at that money, I mean, it doesn't sound significant here. But what kind of advice are you giving to people who might be getting that stimulus check? Because, of course, no one's going to get rich overnight off that, but wealth does kind of get built here by being smart with even small windfalls. So what are you telling people to do if they are to receive a stimulus check here and how they should think about it.
BARBARA CORCORAN: Well, the people in the worst position financially really don't have a choice. What they're going to use their $1,700 or $1,200 for is to put food on the table. Single moms who are supporting three kids-- what do you think she's going to do? Oh, I wonder what I'll do with my stimulus check. No, she's going to feed her kids. If you're in a position where you aren't that concerned about your finances, and too many people truly are, then I think the most important thing to do is pay off your credit card, especially some of these credit card rates are outrageous. There's no chance that people can get ahead.
So paying your credit card in order of the highest interest first is a smart thing to do. But you know, it's not going to do a lot. That's the irony. It's short term. It's a little bit of money. I don't care who you are. And so it's almost like a Christmas present or a present from the government so we all get to vote properly in November. Who the heck knows? But let me tell you something-- it's not what it was all cracked up to be by any means.
ZACK GUZMAN: But I mean, certainly, a $1,200 check wouldn't necessarily be a lot in the wake of losing your job or whether or not that's going to be enough for you, maybe even on top of unemployment insurance through all that too.
