NBA legend Magic Johnson announced Tuesday that an insurance company of which he owns a majority, will fund $100 million in loans for minority- and woman-owned businesses.
EquiTrust Life Insurance Co. will distribute the loans through the Federal Paycheck Protection Program (PPP) in partnership with MBE Capital Partners, according to CNN.
"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."
The company said the initiative is meant to address concerns that women and people of color have been overlooked by the PPP, which has drawn criticism for granting loans to large businesses such as Shake Shack and Ruth’s Chris Steakhouse, as well as Johnson’s old team, the Los Angeles Lakers. All three companies have returned the money.
"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."
MBE Capital CEO Rafael Martinez said the partnership aims to help 100,000 businesses secure enough capital to survive the coronavirus pandemic.
Advocates have said the PPP’s model for loans, which primarily uses banks and Small Business Administration lenders as middlemen, puts people of color at a disadvantage, because they are less likely to have relationships with such institutions.
An April estimate by the Center for Responsible Lending projected that 95 percent of black-owned businesses, 91 percent of Latino-owned businesses, 75 percent of Asian-owned businesses and 91 percent of Native Hawaiian or Pacific Islander-owned businesses are unlikely to secure a PPP loan through a major bank or credit union.