Community house owners keep away from credit score rankings for mortgage applications that assist black-owned companies
Nets owners Joseph C. Tsai and Clara Wu Tsai during the game between the Brooklyn Nets and Indiana Pacers on December 21, 2018 at the Barclays Center in Brooklyn, New York.
Nathaniel S. Butler | National Basketball Federation | Getty Images
Brooklyn Nets owners Joe Tsai and Clara Wu Tsai are taking the next steps to redistribute money from a $ 50 million pledge to help minority communities.
The sports owners have created a $ 2.5 million loan program aimed at black-owned companies affected by Covid-19. The money comes from the Tsai Foundation’s Social Justice Fund, which was set up last year to combat economic inequality in black communities.
The new loans are part of the EXCELerate program and are aimed at owners with a credit score of 620 or below. Although applicants are not judged by score, business owners must be “character-based”. Hence, they need to have good references to secure their loan.
There are two types of credit. The Rapid Recovery loan offers up to $ 15,000 of immediate funds with no interest. These loans are for businesses that have stayed open during the pandemic but need capital for new equipment, renovations, rentals or leases.
The “Neustart” loan is intended for business owners who have temporarily closed or reduced opening times due to the pandemic. Well-referenced applicants can apply for up to $ 100,000 at 2% interest to help restart and normalize operations, and repayments will depend on the success of the companies. When the money from the $ 2.5 million program is repaid, it returns and becomes eligible for new loans. The interest on the loans is used for administrative costs.
Black company owned sign in local store window, MisFits Nutrition, Queens, New York.
Lindsey Nicholson | Education Pictures | Universal picture group | Getty Images
“We know that without economic opportunity there is no social justice, which is why we are so excited to launch the Brooklyn EXCELerate Loan Program, which aims to increase Brooklyn’s BIPOC [Black, indigenous, and other people of color] Post-pandemic business owners and are doing our small part to break down the barriers this community faces in accessing capital, “Wu Tsai said in a statement.
The announcement used statistics from the National Bureau of Economic Research that black-owned companies fell 41% in the early stages of the pandemic, compared with 17% for white-owned companies. It also states that this loan program is designed to “remove the barriers in capital markets that create unfair hurdles for these entrepreneurs”.
Applicants will need “local parishioners” as references, and loans will “require no collateral or guarantor”. Social organizations like TruFund Financial and Brooklyn Alliance Capital will oversee the loans. The Tsai Foundation also hired Gregg Bishop to serve as the fund’s director. Bishop is the former New York Department Commissioner for Small Business Services.
“When the city returns from the pandemic, we will have an opportunity to do better than before, to overcome some of the long standing barriers preventing black wealth accumulation and to ensure that everyone can benefit equally from the capital that comes in our city is new, “said Bishop in a statement.
In August 2020, Wu Tsai spoke to CNBC about developing a five-point plan to improve social and economic equality after the death of George Floyd.
“You have to admit that racism exists and you have to understand that there are systemic imbalances in society that cause racism and lead to a lack of economic mobility and wage development,” said Wu Tsai.
The Nets’ contributions to combating social problems amount to $ 60 million, including $ 10 million for the National Basketball Association’s $ 300 million pledge to create the NBA Foundation.
Tsai and Wu Tsai bought a controlling stake in the Nets for $ 2.35 billion in 2019 after purchasing an initial stake in 2017. And they also own the WNBA franchise, the New York Liberty.