Magic Johnson Funds $100 Million In PPP SBA Loans For Businesses Locked Out By Traditional Banking
Since leaving the NBA, Earvin “Magic” Johnson always seems to be making one business move after another. The founder of Magic Johnson Enterprises has invested in many lucrative businesses including movie theaters, restaurants (T.G.I. Friday’s, Sodexo, and Burger King) and his former NBA team, the Los Angeles Lakers.
Now the former baller wants to find ways to help minority communities hit hard by the coronavirus crisis. He has announced that his life insurance company — EquiTrust Life Insurance Co. — will distribute $100 million to help women, Black and minority-owned businesses that struggled to obtain loans as part of the Payment Protection Program (PPP).
Many Black-owned businesses have been locked out of the PPP program, which ran out of money after several public companies applied for and received funding that was supposed to go to small businesses.
Johnson is the former president of basketball operations for the Lakers.
Many people including government officials were shocked at how big businesses took advantage of the PPP program offered through the Small Business Administration.
“I never expected in a million years that the Los Angeles Lakers, which, I’m a big fan of the team, but I’m not a big fan of the fact that they took a $4.6 million loan,” Treasury Secretary Steven Mnuchin said on CNBC. “I think that’s outrageous and I’m glad they returned it or they would have had liability.”
For Johnson’s new initiative, his EquiTrust insurance company has partnered with MBE Capital Partners to create additional funding for at-risk businesses. Fort Lee, N.J.-based MBE is a nonbank lender that specializes in financing minority- and women-owned companies.
Listen to GHOGH with Jamarlin Martin | Episode 71: Jamarlin Martin Jamarlin Martin discusses how J. Edgar Hoover’s goal to water down and neutralize strong Black politics involved informants and agents trading money and status for the water-down.
MBE’s chief executive, Rafael Martinez told The Wall Street Journal that Johnson’s $100 million commitment will first be used for the 5,000 PPP loans his company has approved so far.
“This is, when you think about it, life and death for so many business owners. They have nowhere else to turn,” Johnson told the WSJ.
Johnson has been vocal about racial disparities in testing for covid-19, stressing how he benefited from early detection when he discovered he had contracted HIV, Clutch Points reported.
The SBA guaranteed the loans made through the PPP as part of the CARES Act, passed by Congress to provide economic relief during the coronavirus outbreak. Participating lenders processed the loans, which were first-come, firt-served. Banks have been accused of favoring their own large customers over qualified small business applicants.
“What we’re launching here now is so important because we’re going to save a lot of small, minority businesses because they can’t just walk into the bank and get that loan,” Johnson said in an interview.
“We knew why the money was gone and couldn’t trickle down to small businesses, especially small minority businesses, because they didn’t have those great relationships with the banks. So this was easy for us to understand,” Johnson told WSJ.