"You can get a million applicants, hopefully. I want people to step up to this," he said on "Squawk on the Street." "When you talk about diversity ... you're not only talking about people of color, you're talking about females. You're talking about LGBTQ, you're talking about veterans, so this could be a lot of people."
The initiative is called "Making it… With Lowe's," and it gives minority-owned small businesses an opportunity to have their products on the home-improvement retailer's shelves and website. The application window launches Tuesday and is open through Sept. 25.
Applicants will be narrowed down to eventually five finalists, according to a Lowe's press release. John will help mentor and prepare them for their pitch directly to Lowe's CEO Marvin Ellison and other executives.
John, who also is CEO of clothing brand FUBU, said the opportunity to bring a product to Lowe's eliminates a key hurdle for many up-and-coming entrepreneurs: distribution.
"Often that is the most important part. After you know you have a product, you know you can distribute it. Now, how do you get it to the masses?" he said. "They wanted to give people this vehicle to do so, without taking any percentage of their company."
In an interview earlier Tuesday on "Squawk on the Street," Ellison said Lowe's idea for the initiative stemmed from the demand for small business grants that launched in May in response to the economic challenges of the coronavirus pandemic. He said that $55 million program, which targeted minority-owned businesses along with those in rural communities, has received over 800,000 applications.
"The demand from this program led us to understand that there's a lot more that we should be doing," said Ellison, who has been vocal about the need for corporate America to step up its efforts on diversity.
Lowe's intends to have finalists selected by the end of this year, with the result of the challenge being unveiled early next year, according to the press release.
John said for him this is different from his role on "Shark Tank," since he is not offering up his own capital to make an investment in exchange for company equity and a role in helping the company grow. Instead, he said he is able to approach it more as a consumer.
"I don't have to think about the personal manner on how I should operate it, how I'm going to get income from it," he said. "All I can do right now is care about, does this solve a problem? Does this have empathy for a customer? Is it making it lighter, faster or stronger, or saving time for somebody? ... I already know distribution is there."
— CNBC's Melissa Repko contributed to this story.
Disclosure: CNBC owns the exclusive off-network cable rights to ″Shark Tank," on which Daymond John is a co-host.