Los Angeles Lakers legend Magic Johnson is offering $100 million in capital to help fund federal loans for minority and women business owners whose businesses have been impacted by the coronavirus pandemic.
Johnson is working with MBE Capital Partners to offer the loans to those hurt by COVID-19 stay-at-home orders. The loans were funded through Johnson’s EquiTrust Life Insurance Company, of which he is a majority owner, 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.
News of the program was first reported by The Wall Street Journal.
“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.”
“These are incredible businesses, small businesses, that have been the pillar of our community that also employ a lot of black and brown people in our community,” Johnson said Sunday on MSNBC. “… We wanted to make sure that minority-owned businesses got small business loans through the PPP program.”
As part of the $2 trillion stimulus package in April, Congress set aside $349 billion in the PPP fund but the money depleted quickly forcing another round of aid. The new funds include $60 billion set aside for small businesses.
In an interview with CNBC on Tuesday, Johnson cited the need to keep African-American and Latino-owned businesses in communities viable during the pandemic.
“We have to remember that these businesses have been in urban communities for a long time,” Johnson 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.’”
“Financially, this has really hurt our community as well as health-wise it’s hurt our community, too,” Johnson added.
Rafael Martinez, CEO of MBE, told MSNBC’s Jabari Young that the funds would look to help 100,000 businesses in urban communities. Applicants to the program are vetted via SBA guidelines and the application process has been simplified to make the loans easier to acquire.
A Hall of Famer who helped the Lakers to five NBA titles in the 1980s, the 60-year-old Johnson has regularly established businesses since retiring. He told CNBC he was surprised the Lakers applied for (and received) a $4.6 million SBA loan, money the team has since returned.
“They did the right thing,” he said. ”[Lakers owner] Jeanie Buss is a very good owner, and she’s smart, so I’m glad that she returned the money because there is a lot of companies out here who really need that money and she was smart enough to understand that.”
When asked about the NBA and other pro sports returning to action, Johnson supported a safe restart with “empty stadiums.”
“We need it,” Johnson said on CNBC. “We thrive on our sports. That’s how we escape our everyday life — is to indulge ourselves in sports. So, we need sports to come back, especially if we’re going to continue to stay home.”