Barbara Corcoran on COVID-19 impact: Most businesses I’m involved with are still in dire straits

The Corcoran Group Founder and Shark on ABC’s "Shark Tank" Barbara Corcoran joins Yahoo Finance’s Zack Guzman to discuss how the companies she's invested in are faring amid the coronavirus pandemic and also shares her thoughts on the SBA loan program.

Video Transcript

ZACK GUZMAN: --that update. Of course, that's the way that some of the larger companies have been trading around this crisis. But of course, the focus for a lot of the-- the efforts coming out of DC have been focused on some smaller businesses through the Small Business Administration and the paycheck Protection Program, which allocates grants, loans that will convert into grants, if small businesses keep employees on their payrolls.

And we are getting new updates out of how the new $310 billion dollars that was reallocated to that effort is being handed out now. The update as of yesterday we're pacing ahead of that original $350 billion-- $350 billion funding that came through first. It was exhausted in 13 days. So potentially, this money, this round of funding might go even quicker.

For more on that, I want to bring on our next guest. Friend of the show and Shark Tank host, Barbara Corcoran joins us again here. And Barbara, you had been kind of giving us the updates in the way that your companies, your businesses have been navigating the PPP, and it didn't sound like they were having much luck. So what's the update on that front and any change in your take on the way that this program has struggled to get money into the hands of small business owners?

BARBARA CORCORAN: Well, in the first round of funding, I had 38 entrepreneurs apply for PPP funding, and four it got it. And when I look at the profiles of the four who got it, they were the largest businesses that I've invested in. Not large by large-business standards, they're businesses that employ 200 people to 15, say, 15 people.

But these are the businesses that were doing well anyway. They certainly needed the money, but they had the best banking contact, and most of them applied regionally to a small bank, and that's how they got their hands on the money. But the balance of the people are still waiting to hear about the money. They're in dire straits, needing the money, and they're hoping that they could hold out until they get some cash in their hands.

ZACK GUZMAN: Yeah, we got-- we had President Obama's former SBA head on the show earlier this week, and she was highlighting a couple of things about how she was surprised how this program was taken. She was saying that banks didn't necessarily need to be in the process because the IRS and the government already knows how much is being paid in taxes, knows how much these businesses have in terms of payroll. And she was basically saying that we didn't need banks to be stuck in the middle here and profiting off of this process.

I'd be curious to get your take on that, maybe in terms of, you know, how complex maybe the process has been for applying for the aid and how it could have been more similar to what we saw in the stimulus check front, where, you know, maybe checks were just handed out to these companies directly from the government to help meet payroll needs.

BARBARA CORCORAN: I enjoy-- I-- I agree with her entirely in that assessment because of my witnessing a lot of things happening during the two-week period. The large banks, who put their most premium customers in first place, and who's a premium customer with a large bank? Someone who has a credit line. And why a credit line? Because banks make the most money off of the credit line. So those guys got put first in line.

The large banks control the allocation of that money much more than the small banks. They are listened to harder. And so if you were working with a large bank and you had the right connection, you got the money.

And that's why I think it just added another layer of unfairness to the whole thing. Do the little banks get it? Do the big banks get it? Remove that, and give it directly to the people, I think a lot of that hardship would have been avoided.

ZACK GUZMAN: Yeah, and a lot of the banks are saying they didn't really necessarily put larger corporations first. But we did hear from, you know, the guidance out of Washington, DC, about, you know, small businesses, sole props basically hold off on applying. So there was kind of, even if there wasn't a necessarily favoring some of these companies, if you listen to the banks, there was, you know, different advice coming out of Washington, DC, depending on the size of these companies as well. So there are a lot of questions there. Of course, we've seen a lot of lawsuits filed.