Making the Assist
ESPN writer Larry Schwartz once wrote that the legendary rivalry between Magic Johnson and Larry Bird pulled the NBA back from the brink of financial ruin.
Now, Johnson wants to do the same for minority-owned businesses.
Johnson is the CEO of Magic Johnson Enterprises and the majority owner of EquiTrust Life Insurance Co.
He’s leveraging EquiTrust’s partnership with MBE Capital Partners, a nonbank lender, to issue $100 million in Paycheck Protection Program loans to 5,000 or so businesses, 80% of which are minority owned.
More than $100 billion in PPP funds remain available.
“What we’re launching here now is so important because we’re going to save a lot of small, minority businesses, because they can’t just walk into the bank and get that loan,” Johnson told
The Wall Street Journal.
“We knew why the money was gone and couldn’t trickle down to small businesses, especially small minority businesses,” he continued, “because they didn’t have those great relationships with the banks.”
Minority-owned businesses are more likely to rely on personal funds, according to a survey by the Federal Reserve Bank of Atlanta. They’re also less likely to apply for a loan in the first place, generally because they assume they’ll be rejected.
Most of the firms surveyed by the Atlanta Fed were profitable and expected revenue to grow. They just didn’t have a lending relationship with a bank.
As a result, when the coronavirus crisis hit, many were left out of the PPP process.
This is a problem in search of a solution.
Johnson hopes to remedy some of that with an assist.
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Emily McCormick
/ vice president of research at Bank Director
