Mark Cuban Says Some Banks Avoid Business Loans, Need Prodding

(Bloomberg) -- Billionaire Mark Cuban said the U.S. Treasury Department may need to start pushing reticent banks to lend more as part of its $349 billion government rescue package for small businesses.

“There are some banks that are actively not trying to take applications, and to minimize the number of loans they make through the program, despite the fact that it pays a 5% commission, if you will, for the loans made,” Cuban said in a Bloomberg Television interview Thursday.

“It’s going to take some prodding unfortunately to really get the stimulus into the hands of those who need it,” said Cuban, who works with a broad slate of entrepreneurs as a “Shark Tank” investor. “It’s a race against time because a lot of these companies are looking at going out of business.”

The Federal Reserve and other regulators granted a sweeping capital break to banks providing small business loans, while saying on Thursday that it would also create a liquidity facility. Senate Majority Leader Mitch McConnell, meanwhile, was blocked in an attempt to pass a $250 billion expansion of the program, with Democratic Senator Ben Cardin objecting because the current Paycheck Protection Program hasn’t run out of money. About a third of the funds have been committed.

Community banks have said that they lack liquidity to continue lending, as the loans are kept on their balance sheets for weeks before the government purchases them.

There are banks also looking to remedy the issue. UBS Group AG said Wednesday that it would free up $2 billion to buy loans from other lenders or through other means of liquidity. After Cuban put out a request on Twitter weeks ago seeking loans for people in need, Gregg Lemkau, one of Goldman Sachs Group Inc.’s top bankers, directed him to work with Live Oak Bank, where a former Goldman partner is president.

“It might take the Treasury Department really pushing some banks,” Cuban said Thursday. “I really, truly expected that forward-thinking banks would use this as a way to attract new customers, because it’s a unique opportunity, but they just haven’t.”

Cuban, owner of the NBA’s Dallas Mavericks, made his fortune two decades ago when he sold his stake in internet streaming pioneer Broadcast.com to Yahoo Inc.

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