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Tsais' Social Justice Fund offering $2.5M in loans to Brooklyn small businesses owned by BIPOC; remember, the Atlantic Yards CBA once promised small business loans

The next initiative from the Joe and Clara Tsai Foundation's Social Justice Fund--founded by the owner of the Brooklyn Nets and Barclays Center operating company--was announced yesterday, heralded by a prominent New York Daily News article, published online as Clara Wu Tsai’s EXCELerate is a ‘win-win-win-win’ for Brooklyn and Black business and with a slightly different headline in print, as shown below.


‘Rapid Recovery’ loans up to $15,000 will aid those who were able to stay open through the pandemic with expenses like equipment, renovations and rent & lease assistance, all at no interest.
‘Restart’ loans will provide Brooklyn businesses with loans from $15,000 to $100,000 at 2% interest. Qualifying businesses have closed temporarily or have significantly reduced operating hours and have significant challenges to reopening or normalizing due to insufficient operating capital.
“Clara has been very intentional about not only providing support for the community but involving the community,” Gregg Bishop, the program's executive director, told Sportico. “What we’re trying to encourage is keeping that $2.5 million investment circulating within the black community in Brooklyn.” (A Black man from East Flatbush, Bishop is the former commissioner of the NYC Department of Small Business Services.)

"Character-based" loans

Instead of relying on the deeply-complicated and often discriminatory credit score system to determine eligibility, the Social Justice Fund is making all loans ‘character-based’ – meaning that applicants will be reviewed through the lens of references provided by local community members on their behalf. They will also only be available to those with credit scores negatively impacted by the pandemic, and will require neither collateral or guarantor, providing meaningful assistance to those who might otherwise find it difficult or impossible to obtain capital.
Who benefits?

Despite the headlines about "Black B'klyn business owners," the application defines eligibility as businesses located in Brooklyn that are "51% or more owned by an individual who identifies as Black, Indigenous, or a person of color (BIPOC)." 

Note that "person of color" can be a contested designation, since, well, mayoral candidate Eric Adams contended that rival Andrew Yang didn't quality.

So the Tsai Foundation's definition offers significant leeway, at least for businesses in Brooklyn. 

The leeway was even greater for MWBE goals, set up under New York State auspices or stated in the Atlantic Yards Community Benefits Agreement (CBA), which allow minority- and women-owned businesses from a much wider geographical area, even though the CBA was signed by leaders said to represent Central Brooklyn and its large Black population.

Making up for the Atlantic Yards CBA

As I wrote upon the announcement of the $50 million Social Justice Fund, it might accomplish, very belatedly, some of what was intended in the much-hyped  CBA, signed in 2005 and crucial for getting political support for Atlantic Yards--but which has been largely unfulfilled.

For example, the CBA section on Small Business Development and Contracting aimed to "foster the successful growth and establishment of Minority and women owned businesses," including work before, during, and after construction. It also stated (screenshot at right):
The Developers... will attempt to put together a consortium of lenders to provide a low-interest working capital revolving loan pool to assist Community based M/WBEs small businesses seeking to (1) perform work related to the Arena and/or the Project; and/or (b) operate franchises or provide services in the Arena.
There's no evidence that "attempt" got anywhere, but, then again, the developers were not making the profit they expected and the promises were not binding.

The Tsais, on the other hand, have boatloads of money, a previous commitment to social justice in the United States, stewardship of a pro basketball team in a league buffeted by last year's racial traumas, plus, well, a reputation to buff.

Good timing?

Whether coincidental or not, the timing of the announcement also helps distract--not that sportswriters are looking hard to notice--from Joe Tsai's disturbingly casual defense of China's crackdown in Hong Kong.

"I look at this history, I want to make sure that we prevent foreign powers from carving up our territories," Tsai told interviewer Andrew Ross Sorkin. "I think Hong Kong ought to be seen in that context, you know, I think there's a lot of criticism of, you know, the democratic freedoms or freedoms of speech as being surpressed, but overall, since they instituted the National Security Law, everything is now stabilized."

Since then, consider the 6/23/31 New York Times headline, ‘Forbidden Fruit’: Apple Daily, Pro-Democracy Newspaper in Hong Kong, Is Forced to Close, which also reported that an editorial writer was arrested.

More on the project

The Social Justice Fund is partnering with two Community Development Financial Institutions, Brooklyn Alliance Capital and TruFund Financial along with the Brooklyn Chamber of Commerce.

Eligible businesses must have been operating as of January 1, 2019 and adversely impacted by COVID, such as losing revenue, needing capital, and/or having to shut down.

“Literally, if you need to get a loan, you need to have a good credit score, you need to have collateral and/or you need to have a guarantor,” Bishop told the Daily News. “We have stats that show (that) almost half of Black Americans have a credit score that’s under 620, and that means that it automatically excludes them from the traditional capital market.”

But such small businesses can qualify thanks to that character reference, such as a religious faith leader or another business owner.

“All we’re asking for is a viable business,” Bishop told Sportico. “We’re going to ask you what you need the money for and how you intend to use it. And we’re going to ask you to find someone in the community to vouch for your business."

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