"There's a lot of uncertainty" — When Shark Tank's Mark Cuban admitted small businesses faced a Catch-22

In a May 2020 interview with CNBC, Shark Tank investor Mark Cuban was asked about the financial struggles small businesses had faced during the COVID-19 pandemic, including whether they were receiving sufficient funding. He explained that many businesses were in a "Catch-22" situation—needing to reopen to survive while facing significant obstacles. Cuban summarized the issue by stating,

"There's a lot of consternation, there's a lot of uncertainty and that's holding businesses back."

A Catch-22 is a paradox, meaning an impossible situation where the solution is prevented by a problem it causes. In regard to this context, companies required revenue to survive but were hindered by limitations, lack of finances, and problems of employment that prevented them from opening.

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Shark Tank's Mark Cuban on small businesses facing Catch-22 during uncertain times

Mark Cuban went on to describe the financial struggles small businesses were facing, specifically with the Paycheck Protection Program (PPP), a government program aimed at providing temporary capital. He described that some companies were not willing to accept PPP loans due to the limitations involved. He said,

"There are companies that are choosing not to take it because of the rules associated with them."

He went on to say that even when companies had access to capital, they were not certain how to effectively use it under the uncertainty of reopening timelines. Furthermore, the timing of capital injections was not always synchronized with when companies could reopen. Cuban added,

"The eight weeks may not match up with the timing that they're able to get open."

The Shark Tank investor underscored that this mismatch in financial assistance and business recovery created additional hurdles for small businesses trying to navigate an already difficult landscape.

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Reopening was not a clear solution

Despite efforts to reopen, many businesses found that resuming operations was not as straightforward as anticipated. Mark pointed out that in some cases, local government restrictions prevented businesses from opening even if they wanted to. The Shark Tank investor explained,

"On one hand, they'd like to open up, but in some cases, municipalities, states, counties, whatever, [are] keeping them from opening."

Even after businesses were legally permitted to reopen, they encountered another issue—shortages of staff. Certain employees were earning more from unemployment benefits than they would have from working, and thus it was hard for businesses to rehire their employees. Cuban explained the scenario, saying,

"Even if they are able to open, they're not able to get their employees to come back because they're making more from unemployment."

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Market uncertainty made it difficult to plan ahead

Beyond operational and financial struggles, Cuban also discussed the broader economic uncertainty businesses faced. He explained that predicting consumer and corporate demand had become increasingly difficult, making it challenging to determine the true value of businesses. Mark emphasized this point, stating,

"I think it's almost impossible to predict where consumer and corporate demand is going to come from, and because of that, it's hard to create a valuation for businesses."

This uncertainty reached beyond small business and into the stock market itself. Although companies like Amazon and Netflix were profiting from shifting consumer patterns, the overall market was still hard to measure. The Shark Tank investor added,

"Business has been fundamentally changed, consumer consumption has been fundamentally changed."

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