Magic Johnson is offering $100 million to minority-owned businesses left out of PPP loans
- In partnership with MBE Capital Partners, Magic Johnson is offering $100 million in loans to businesses owned by minorities and women, he told CNBC.
- The funds will be distributed through the Small Business Administration's Paycheck Protection Program.
- They are intended to assist business owners in urban areas.
While the US has set aside a total of $670 billion in loan relief to small businesses struggling in the coronavirus pandemic, many African-American and Latino-owned businesses have been left out.
Magic Johnson wants to help.
Johnson, who is the CEO of Magic Johnson Enterprises, collaborated with MBE Capital Partners to offer $100 million in loans to minority and women-owned companies that are hurting.
"This will allow them to keep their employees and keep their doors open," the former Los Angeles Lakers star told CNBC's "Squawk Box" on Tuesday.
The loans were funded through Johnson's EquiTrust Life Insurance Company and will be distributed through the government's PPP program, according to CNBC.
Johnson's project highlights a problem with how loans have been distributed so far. Many minority-owned businesses have missed out on receiving loans so far, in part because they lack ties to major banks. Community financial institutions, which focus on serving people typically underserved by those banks, including low-income minority business owners, are not eligible for the Paycheck Protection Program funding.
Rafael Martinez, CEO of MBE, told CNBC said that the loans will assist around 100,000 businesses in urban communities.
"We have to remember that these businesses have been in urban communities for a long time," Johnson told CNBC. "They've been doing great things, and they probably didn't have a relationship with the banks when the stimulus package went out. So now, we're able to say, 'Hey, you can have a relationship with us.'"
In addition to the financial hit that small minority-owned businesses are facing, black Americans have also been disproportionately hit by the coronavirus, as well.
"Financially, this has really hurt our community as well as health-wise it's hurt our community, too," Johnson told the network.