Former basketball great Magic Johnson is going above and beyond for small business owners who are struggling because of the pandemic. According to CNBC, he partnered with MBE Capital Partners to offer $100 million in loans to minority- and women-owned small businesses.
"The loans were funded through Johnson's EquiTrust Life Insurance Company and will be provided through the Small Business Administration's Paycheck Protection Program."
Johnson appeared on CNBC's Squawk Box, where he said that these loans will allow businesses to "keep their employees and keep their doors open" during the pandemic.
There were federal PPP loans set aside by Congress to the tune of $349 billion, but even so, the money depleted quickly, and larger businesses, like Shake Shack and other chains received loans while smaller businesses were left in the dust.
As CNBC reports, "African-American and Latino-owned businesses have been left out of the new PPP funds due to a lack of relationships with bigger banks." It seems counterintuitive to require small businesses that can't afford to stay open without aid to have a relationship with a large bank, but here we are.
Luckily, Magic Johnson stepped in to help. "We have to remember that these businesses have been in urban communities for a long time," he said. "They've been doing great things, and they probably didn't have a relationship with the banks when the stimulus package went out.
"So now we're able to say, 'Hey, you can have a relationship with us," he continued. "Financially, this has really hurt our community as well as health-wise, it's hurt our community, too."
As for how many companies these loans will assist, it's a lot. According to Rafael Martinez, the CEO of MBE, about 100,000 businesses in urban communities would get assistance. Companies can apply, and they are vetted using the SBA guidelines.
But they've also streamlined the application process to make it easier to apply. No one wants to make struggling people jump through hoops to get the help they deserve. And Johnson and MBE will work to grow his investment and make sure their efforts don't stop with just that $100 million.
It's unfortunately very true that minority populations have been hit harder by COVID-19. According to The New York Times, many black and Latino business owners struggled to get PPP loans, "and many say they are on the brink of closing permanently" because of it.
According to one survey, "Just 12 percent of the owners who applied for aid from the Small Business Administration — most of them seeking loans in the $650 billion paycheck program — reported receiving what they had asked for, while 26 percent said they had received only a fraction of what they had requested. Nearly half of all owners said they anticipated having to permanently close in the next six months."
While Magic Johnson is doing invaluable work to help black and Latino communities, he shouldn't have to. He's filling an unfortunate void left by our government.