Magic Johnson’s Life Insurance Company Reportedly Funding $100 Million In Small Business Loans
Former NBA all-star Magic Johnson told the Wall Street Journal that his life insurance company will provide $100 million in funding for small women and minority-owned businesses as part of the Small Business Administration’s embattled Paycheck Protection Program.
- The loans are being offered through a partnership of Johnson’s EquiTrust Life Insurance Co. and MBE Capital Partners, a New Jersey-based nonbank lender that specializes in financing businesses owned by women and minorities.
- Johnson said he heard that small businesses were struggling to obtain PPP loans in news reports.
- But Johnson’s former team, the Los Angeles Lakers (he played 13 seasons for them, and was their president of basketball operations) was among a number of larger companies that were able to obtain the loans, news that received heated criticism.
- MBE’s chief executive, Rafael Martinez, had received complaints from clients who couldn’t get loans from the PPP’s first round of funding; reports later revealed that some lenders prioritized businesses with whom they had existing relationships.
- Martinez told the WSJ 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 and Martinez were connected by civil rights activist Rev. Al Sharpton, the WSJ reported.
“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. “So this was easy for us to understand.”
Minority communities have been disproportionately impacted by the coronavirus pandemic, according to data released by New York City, Los Angeles, and Chicago. African Americans in New York City make up 28% of coronavirus deaths, but makeup 22% of the population. And in Los Angeles, 17% of people who died from coronavirus were African American, but the group is 9% of the population there. In Chicago, the numbers are the starkest: 71% of deaths from the virus were African American—who comprise 29% of the city’s population.
The coronavirus pandemic cratered U.S. markets and, with states temporarily shuttering non-essential businesses, small business owners are struggling to survive. The PPP loan program was designed to help small businesses get by during this time, and passed by Congress as part of trillions in stimulus funding. Reports surfaced, however, that larger businesses like Shake Shake, Ruth’s Chris Steak House, and the Lakers were able to obtain tens of millions in PPP loans. Ensuing backlash convinced them—and others—to give back their loans. The program’s initial launch was reported to be chaotic, and funding dried up quickly. Another $310 billion of PPP funding was approved by Congress and became available April 27. That rollout was said to be similarly plagued with login issues and slow computer systems, and questions have been raised as to whether the loans are able to get to the businesses that need them the most. Forbes