With the future of small businesses in urban communities at risk, former National Basketball Association (NBA) star Magic Johnson has stepped in to offer assistance.
Johnson, CEO of Magic Johnson Enterprises, collaborated with MBE Capital Partners to offer $ 100 million in loans to minority companies and women affected by orders to stay home due to Covid-19.
The loans were funded through Johnson’s EquiTrust life insurance company and will be provided through the Small Business Administration (PPP) salary protection program.
“This will allow them to keep their employees and keep their doors open,” Johnson told CNBC’s “Squawk Box” Tuesday.
Congress set aside $ 349 billion for PPP funds in April as part of a $ 2 billion stimulus package, but the money ran out quickly, forcing another round of aid. The new funds include $ 60 billion for small businesses.
But even with the new money available, African-American and Latino-owned companies have been left out of the new PPP funds due to a lack of relationships with larger banks.
Democratic lawmakers, including U.S. Senator Kamala Harris, even called on the SBA and the Treasury Department to ensure that minority businesses receive help.
But with limited financial aid, some companies are in danger of closing permanently.
“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 came out. So now we can say, ‘Hey, you can have a relationship with us.'”
“Financially, this has really hurt our community, as well as health has also hurt our community,” added Johnson.
Rafael Martínez, executive director of MBE, said the funds would seek to help 100,000 companies in urban communities. Applicants are screened using SBA guidelines. Martinez added that the application process is now streamlined, making it “easier to qualify for these loans.”
“There is a lot of money left,” Martinez said, adding that the next stage is to increase work with the depositary bank to “Erving’s multiple investment to $ 1 billion or more.”
For record prices, auction house Sotheby’s auctioned off the iconic ‘Nike Air Jordan 1S’ sneakers with basketball legend Michael Jordan in 1985 and signed with a permanent marker on May 17.
Johnson, 60, who helped the Los Angeles Lakers win five NBA titles until the 1980s, said he was “surprised” that the team applied for an SBA loan and received $ 4.6 million. The Lakers were criticized for the action, but Johnson praised the team for returning the money.
“They did the right thing,” he said. “[Lakers] Jeanie Buss is a very good owner, and she is smart, so I’m glad she gave the money back because there are many companies that really need that money and she was smart enough to understand that. ”
When asked if the professional sports leagues would return to action, Johnson echoed what many in the industry have said, predicting a restart with “empty stadiums.” But he also supported the resumption of the leagues.
“We need it,” said Johnson. “We thrive in our sports. This is how we escape from our daily lives; is to enjoy sports. So we need sports to come back, especially if we’re going to continue at home. “
This story first appeared on CNBC.com.