Brooklyn Nets owners Joe Tsai and Clara Wu Tsai are taking the next steps to distribute money from a $50 million pledge to help minority communities.
The sports owners have launched a $2.5 million loan program targeting Black-owned businesses affected by Covid-19. The money comes from the Social Justice Fund established last year by the Tsai foundation, which aims to combat economic inequality in black communities.
The new loans are part of the “EXCELerate” program and are intended for owners with a credit score of 620 or lower. But while applicants are not judged on the scores, business owners must qualify for “character-based”. Therefore, they must have good references to secure their loan.
There are two types of loans. The “quick recovery” loan provides instant cash up to $15,000 with no interest. These loans are for businesses that have remained open during the pandemic but need capital for new equipment, renovations, rent or lease.
The “restart” loan is for entrepreneurs who are temporarily closed or have worked fewer hours due to the pandemic. Well-known applicants can apply for up to $100,000 at 2% interest to help restart and normalize operations, and repayments depend on the success of the businesses. When 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 administration costs.
“We know there is no social justice without economic opportunity, which is why we are so excited to launch the Brooklyn EXCELerate Loan Program aimed at increasing Brooklyn’s BIPOC [Black, indigenous, and other people of color] entrepreneurs after the pandemic and are doing our small part to overcome barriers this community faces in accessing capital,” Wu Tsai said in a statement.
The announcement used statistics from the National Bureau of Economic Research, which states that black companies fell by 41% in the early stages of the pandemic, compared to 17% among white companies. It also says that this loan program “seeks to address the hurdles in the capital markets that create unfair barriers for these entrepreneurs.”
Applicants will require “local community members” for references, and loans will “require no collateral or guarantor.” Community organizations, including TruFund Financial and Brooklyn Alliance Capital, will monitor the loans. The Tsai Foundation also hired Gregg Bishop as the fund’s executive director. Bishop is a former commissioner of the New York Department of Small Business Services.
“As the city bounces back from the pandemic, we have an opportunity to do better than before, to tackle some of the long-standing barriers that prevent the accumulation of black wealth and ensure that everyone can benefit equally of the capital entering our city again,” Bishop said in a statement.
Speaking to CNBC in August 2020, Wu Tsai discussed developing a five-point plan to improve social and economic equality following 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 that cause a lack of economic mobility and a lack of wage trajectory,” Wu Tsai said.
The Nets’ contributions to fighting social problems total $60 million, including $10 million donated to the National Basketball Association’s $300 million commitment to establish the “NBA Foundation.”
Tsai and Wu Tsai bought a majority stake in the Nets in 2019 for $2.35 billion after buying an initial share in 2017. And they also own WNBA franchise, the New York Liberty.