The CEO of Magic Johnson Enterprises has partnered with MBE Capital Partners to offer $ 100 million in loans to minority and women companies affected by home orders due to Covid-19. The loans were funded by Johnson’s EquiTrust life insurance company and will be provided through the Small Business Administration’s paycheck protection program.
“This will allow them to keep their employees and keep their doors open,” Johnson told CNBC’s “Squawk Box” on Tuesday.
Congress set aside $ 349 billion for P3 funds in April as part of a $ 2 trillion stimulus package, but the money ran out quickly, forcing another wave of aid. The new funds include $ 60 billion earmarked for small businesses.
But even with new funds available, African American and Latin American companies have been excluded from the new PPP funds due to a lack of relationships with the largest banks. Democratic lawmakers, including Senator Kamala Harris of California, have even called on the SBA and the Department of the Treasury to ensure that minority businesses are not left without help.
But with limited financial assistance, some businesses may close permanently.
“We have to remember that these companies have been in urban communities for a long time,” said Johnson. “They did great things, and they probably had no relationship with the banks when the stimulus package came out. So now we can say, “Hey, you can have a relationship with us.” ”
“Financially, it really hurt our community as well as health, it also hurt our community,” added Johnson.
Rafael Martinez, CEO of MBE, said the funds would seek to help 100,000 businesses in urban communities. Applicants are selected using the SBA guidelines. Martinez said that the application process is now simplified, making it “easier to qualify for these loans. “
“There is a ton of money left,” said Martinez, adding that the next step was to develop work with the depository banks to “multiply Earvin’s investment to $ 1 billion or more.”
Johnson, 60, who helped the Los Angeles Lakers win five NBA titles in the 1980s, said he was surprised the team applied for an SBA loan and received $ 4.6 million. The Lakers received criticism for the action, but Johnson praised the team for making the money.
“They did the right thing,” he said. ” [Lakers owner] Jeanie Buss is a very good owner, and she’s smart, so I’m glad she made the money because there are a lot of companies here that really need that money and she was smart enough to understand. “
Asked about the return of professional sports leagues, Johnson echoed what many in the industry said, anticipating a restart with “empty stadiums.” But he also supported the recovery.
“We need it,” said Johnson. “We thrive on our sports. This is how we escape our daily life – it is about taking up sport. So we need the sport to come back, especially if we want to continue staying at home. “
Correction: This story has been revised to correct that Senator Kamala Harris and other Democratic lawmakers want the SBA and the Department of the Treasury to ensure that minority businesses are not denied assistance.