Asset manager launches loan program for minority-owned businesses
Alternative asset manager Owl Rock Capital Partners has committed $5 million to a loan program for minority-owned small businesses in the U.S. that have been hammered by the COVID-19 pandemic and other economic and social crises.
“There is an emphasis on these funds supporting full employment, so the goal is to have a positive ripple effect,” Owl Rock co-founder Marc Lipschultz said in an interview. The interest-free loans are roughly expected to be between $100,000 and $250,000, he said.
The program is part of a push by the firm to address racial inequality and economic disparity that’s been exacerbated by the coronavirus. The U.S. saw a 41% decline in black business owners from February to April, compared to 17% for white owners, according to a new study from the National Bureau of Economic Research. Fed Chairman Jerome Powell on Wednesday highlighted the unbalanced nature of the recession, which has seen black and Latino unemployment spike.
“We view this as our next step in contributing in our way to the economic recovery,” Lipschultz said. “As we were developing the program, and especially in the last two weeks, there was a very clear reminder to us of all the inequities in the system, and we want to use our resources to combat them.”
Owl Rock’s program will be administered by a unit of Newtek Business Services, and the loans are intended to help companies meet payroll and “keep the lights on,” according to a statement. Owl Rock anticipates lending out all the money under the program this year. “This is an immediate need,” Lipschultz said.
Owl Rock, which had $17.3 billion in assets under management as of March 31, provides direct lending to middle-market companies in the U.S. The firm was founded by Lipschultz, Doug Ostrover and Craig Packer, who held senior positions at KKR, Blackstone and Goldman Sachs, respectively.