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By Harmeet Kaur, CNN
(CNN) – Magic Johnson may no longer play in the NBA, but the Hall of Fame member continues to make valuable assists.
Johnson announced that EquiTrust Life Insurance Co., of which he owns a majority, is providing $ 100 million in capital to fund federal loans to minority business owners and women who have been hit hard by the Coronavirus pandemic.
EquiTrust will work with MBE Capital Partners, a lender specializing in asset-based lending for minority-owned small businesses, to distribute the loans through the federal government. Paycheque Protection Program.
The loans are aimed at supporting people of color and women who operate businesses in underserved communities, according to a press release.
The news was first reported by The Wall Street Journal.
“These are amazing businesses, small businesses, that have been the backbone of our community and 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 get small business loans under the P3 program.”
Concerns about people of color accessing loans
The partnership arose out of fears that women and people of color would have difficulty accessing loans offered by the Small Business Administration Coronavirus Emergency Relief Program – is part of the federal government’s massive stimulus plan.
“Johnson’s EquiTrust provides essential financial support to underserved communities and businesses that have been traditionally neglected,” said EquiTrust and MBE Capital Partners in a joint press release. “These small and diverse businesses often struggle to develop strong lending relationships with the big banks.”
The goal is to help 100,000 businesses secure the resources that will allow them to survive the pandemic, MBE Capital CEO Rafael Martinez told MSNBC.
The SBA program has come under criticism
the Paycheque Protection Program was plagued by technical issues and wondering if lenders prioritize companies that need money the most after several companies with deep pockets received loans, including the the Los Angeles Lakers – the famous NBA franchise with which Johnson was long affiliated. The team returned the money.
After the $ 349 billion initial congress Allocated to the program dried up, lawmakers replenished the fund with an additional $ 310 billion. Again, there were concerns that money for small lenders is running out.
Rights organizations say businesses owned by people of color are inherently disadvantaged. Funds are accessible through participating SBA banks and lenders – relationships that people of color are less likely to have.
The Center for Responsible Lending estimated in April that about 95% of Black-owned businesses, 91% of Latino-owned businesses, 91% of Native Hawaiian or Pacific Island-owned businesses, and 75% of Asian-owned businesses were unlikely to receive a PPP loan via a traditional bank or a syndicate loan.
The federal CARES law, which created the Paycheck Protection Program, ordered the SBA to prioritize underserved and rural markets. But a recent report from the Inspector General found that the agency had not communicated this priority to lenders.
The report also found that the SBA did not need demographic data to identify program borrowers in underserved markets, making it difficult to determine the amount of funding going to targeted communities.
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