Magic Johnson is picking up the slack for the Small Business Administration’s spotty execution of the Paycheck Protection Program (PPP).
The former NBA all-star told the Wall Street Journal that he will donate $100 million to women and minority-owned small businesses via his insurance company.
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! https://t.co/O6uMzTfXGe— Earvin Magic Johnson (@MagicJohnson) May 18, 2020
The federal government’s $650 billion Paycheck Protection Program, created to secure employees’ paychecks and to ensure the survival of small businesses impacted by the pandemic, has failed to recognize hundreds of black and other minority-owned businesses while millions in taxpayer money has been allocated to huge corporations and massive chain restaurants. Read: The Los Angeles Lakers and Ruth’s Chris Steakhouse.
“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,” Johnson told the WSJ.
Johnson’s EquiTrust Life Insurance Company will partner with MBE Capital Partners, a financial firm that lends to businesses owned by women and minorities, to distribute the generous donation to the people the PPP was meant to safeguard.
MBE Chief executive Rafael Martinez heard from many eligible clients that they’d been unable to get loans in the PPP’s first round of funding, and it came to light that some lending institutions prioritized businesses with whom they maintained existing relationships.
“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 news release, as reported by WSJ. “These small and diverse businesses often have difficulty developing strong lending relationships with big banks.”
In fact, a survey by Color of Change and Unidos US shows that just 12% of black and Latino small business applicants received funding from the government’s PPP.
The first loans to be fulfilled by Johnson’s $100 million will be 5,000 PPP loans previously approved by MBE.
“This is, when you think about it, life and death for so many business owners. They have nowhere else to turn,” Johnson said.
According to data from New York City, Los Angeles and Chicago, minority populations have been disproportionately and devastatingly affected by the coronavirus pandemic. Black people in New York City make up 22% of the population but have suffered 28% of coronavirus deaths.
In LA and Chicago, the numbers are even more disproportionate. 9% of Los Angeles is black, but black people account for 17% of deaths. And Chicago, with black people making up 29% of the total population, has seen the most disturbing distribution of impact: 71% deaths accounted for by African Americans.