Provides critical financial support to underserved communities and businesses.
Small borrowers struggling to apply for loans from the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) launched in April as part of the federal government’s $2 trillion stimulus package now have a reason to feel hopeful.
Los Angeles Lakers legend and business mogul Earvin “Magic” Johnson is providing $100 million in capital to fund loans through the Small Business Administration’s PPP via his EquiTrust Life Insurance Co. to assist minority-owned businesses that are being overlooked. To offer these loans, EquiTrust, where Magic Johnson Enterprises owns majority, is partnering with Fort Lee, New Jersey-based nonbank lender MBE Capital Partners, which specializes in financing for minority- and women-owned companies.
Johnson tweeted the announcement on social media saying, “I’m excited to announce that my company Equitrust will be partnering with MBE Capital Partners to deploy $100M in PPP loans to minority-owned businesses!” The partnership of the two organizations was made possible through the National Action Network, which is the civil rights organization founded by the Rev. Al Sharpton.
“Johnson’s EquiTrust is providing critical financial support to underserved communities and businesses that have been traditionally neglected,” EquiTrust and MBE Capital Partners said in a joint news release. “These small and diverse businesses often have difficulty developing strong lending relationships with big banks.”
Reports say Johnson’s funding will go toward approximately 5,000 loans that are already approved, and the recipients of the loans will be able to afford access to capital that has not been made available to them from credit unions and major banks. According to The Center for Responsible Lending, approximately 95% of black-owned businesses, 91% of Latino-owned businesses, 91% of Native Hawaiian or Pacific Islander-owned businesses and 75% of Asian-owned businesses were unlikely to receive a PPP loan through a mainstream bank or credit union.
The initial amount of $349 billion allotted for PPP funds earlier this year was exhausted in a quick two weeks. Then an amount of $310 billion was additionally approved with $60 billion intended for small businesses applying for the financial assistance. But poor relationships with banks have witnessed African American and Latino-owned businesses left out of the much-needed funding during these challenging times.
Per The Wall Street Journal, which first reported on the story, the NBA icon is also considering other ways to help minority communities affected by the coronavirus pandemic such as providing meals in inner cities and possibly expanding the partnership with MBE Capital.