Magic Johnson’s life insurance company is reportedly funding $ 100 million in small business loans

TOP LINE

Former NBA All-Star Magic Johnson said the Wall Street Journal that his Life insurance company will provide $ 100 million to small women and minority-owned businesses as part of the Small Business Administration’s competitive paycheck protection program.

IMPORTANT FACTS

The loans are offered through a partnership between Johnson’s EquiTrust Life Insurance Co. and MBE Capital Partners, a New Jersey-based non-bank lender specializing in the financing of women and minority-owned businesses.

Johnson said he heard news reports that small businesses were struggling to get PPP loans.

But Johnson’s former team, the Los Angeles Lakers (he played for them 13 seasons and was their basketball operations president) were among a number of larger companies that managed to get the loans, which has been heavily criticized.

MBE CEO Rafael Martinez had received complaints from customers who were unable to obtain loans from the PPP’s first round of financing; Reports later showed that some lenders were prioritizing companies with which they had existing relationships.

Martinez said that WSJ that Johnson’s $ 100 million pledge will initially be used for the 5,000 PPP loans his company has approved to date.

“This, if you think about it, is life and death for so many entrepreneurs. You have nowhere else to turn, ”Johnson told the WSJ.

Surprising fact

Johnson and Martinez were founded by civil rights activist Rev. Al Sharpton, the WSJ reported.

Crucial quote

“We knew why the money was gone and couldn’t trickle into small businesses, especially small minority companies, because they didn’t have these great relationships with banks,” said Johnson WSJ. “That was easy for us to understand.”

Big numbers

Minority communities were disproportionately affected according to New York City, Los Angeles and Chicago due to the coronavirus pandemic. African Americans in New York City account for 28% of coronavirus deaths but make up 22% of the population. And in Los Angeles, 17% of the people who died from coronavirus were African American, but the group makes up 9% of the population there. The numbers are clearest in Chicago: 71% of deaths from the virus have been African Americans – who make up 29% of the city’s population.

Key background

The coronavirus pandemic has cratered U.S. markets and as states temporarily shut down non-essential businesses, small business owners struggle to survive. The PPP loan program was designed to help small businesses get through this time and was passed by Congress as part of trillions of trillions of incentive funding. However, reports surfaced that larger companies like Shake shake, Ruth’s Chris Steakhouse and the Lakers were able to take out PPP loans in the millions. The ensuing backlash convinced them – and others – to return their loans. It was reported that the initial launch of the program was chaotic and funding quickly dried up. Another $ 310 billion in PPP funding was approved by Congress and became available on April 27 plagued with login problems and slow computer systems, and Questions arose whether the loans reach the companies that need them most.

Continue reading

The $ 350 billion small business loan program is officially out of money. Legislators cannot agree on what will happen next. (Forbes)

Shake Shack returns a $ 10 million PPP loan amid criticism of restaurant chains receiving grants from Rec (Forbes)

Ruth’s Chris Steak House Returns $ 20 Million PPP Loan Amid Public Backlash As Treasury Department Issues New Guidelines New (Forbes)

“Extremely disappointing” and “totally predictable” – slowdowns and lockouts plague the second round of PPP (NBC News)

Not-so-small businesses continue to benefit from PPP loans (NPR)

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