NBA hall of famer Magic Johnson has partnered with prominent finance executive Rafael Martinez to provide $100 million in loans to minority-owned and women-owned small businesses in the United States. Johnson is Chairman, CEO and majority owner of investment conglomerate Magic Johnson Enterprises. Martinez is CEO of MBE Capital Partners, the largest independent finance provider for small and diverse businesses in the U.S., Caribbean and Mexico. Magic Johnson Enterprises owns a controlling stake in EquiTrust Life Insurance Company, which is providing the $100 million. MBE will disburse the loans.
Race and pandemic impacts
The partnership emerged in response to the disproportionate impact the pandemic and economic crisis are having on communities of color and the businesses that serve them. Per capita, black and latino people are much more likely to die from COVID-19 than are white people. Experts attribute this trend, at least in part, to racial discrepancies in health care access, unemployment rates, nutrition, and chronic medical conditions such as diabetes, heart disease, lung disease and high blood pressure.
Additionally, minority-owned and women-owned businesses are having a harder time accessing government stimulus loans that have been made available via the federal Paycheck Protection Program. The Program provides low-interest, forgivable loans to small businesses throughout the country. To date, it has made $669 billion available for this purpose. However, many American banks have prioritized larger corporations with well established credit relationships, leaving smaller operations out to dry. According to a recent study, only 12% of minority business owners have reported receiving the PPP funding they requested. Magic Johnson and Rafael Martinez are working to fill those gaps. They are hoping to increase the amount of loans their organizations provide to $1 billion, funding 100,000 businesses.
We knew why the money was gone and couldn’t trickle down to small businesses, especially small minority businesses, because they didn’t have those great relationships with the banks.Magic Johnson
About Magic Johnson and his business empire
Although Magic Johnson was one of the most successful and recognizable athletes in the history of the NBA, he played during an era when stars did not make nearly as much money as they do now. The three-time MVP led the Los Angeles Lakers to 5 national championships. In 1981, he signed a 25-year deal with the team, worth just $25 million overall. By comparison, Steph Curry of the Golden State Warriors currently makes over $40 million per year.
However, since his retirement, Johnson has amassed a $600 million fortune largely related to the $1 billion valuation of Magic Johnson Enterprises. He bought a $10 million stake in the Lakers and resold it years later for more than five times the purchase price. He also, at one point, acquired and resold 125 Starbucks stores. Magic Johnson Enterprises has invested across a range of industries from real estate development to movie theaters. Johnson is currently a co-owner of the Los Angeles Dodgers.
The Magic Johnson Foundation has awarded over $21 million in grants across a variety of health and empowerment initiatives.