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Goldman Sachs and Warren Buffett to the Rescue! Small businesses have been crying for help getting loans for two years now. And finally, help arrives from an unexpected quarter: global investment banking and securities firm Goldman Sachs is teaming with savvy American investor-icon Warren Buffett to offer $300 million in financial aid to small businesses, coupled with $200 million more for college-level training for entrepreneurs.
The initiative, dubbed 10,000 Small Businesses, will pump the funds into Community Development Financial Institutions, or CDFIs. CDFI managers will then make the loans. The program kicks off in New York, with first funding going to CDFI Seedco Financial Services, and training at the Small Business Development Center based at La Guardia Community College in Queens. CDFIs have already been in the news recently, as the stimulus bill jacked up the federal funding contribution to these community lending institutions from the $50 million level of the Bush era to $400 million. Large lumps of cash granted to CDFIs see their impact greatly magnified in the marketplace, as each dollar tends to leverage another $17 or so of private investment. There's been plenty of cynical reaction in the blogosphere to the announcement. Is Goldman's plan simply a PR move to help distract the public from the billions in bonuses they gave their execs shortly after taking federal TARP funds? Do business owners care if the new funds will actually help small businesses? Will it really help small businesses? Weigh in with your opinion.
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Carol,
Unfortunately this program by GS appears to be more focused on training and outlay of funds to community colleges vs. actually getting money into the hands of small businesses that are ready to generate meaninful jobs. I personally replied GS through the WSJ immediately only to be turned away at every turn.
Our company, Thor Power Corp. is a small start up company with technologically advanced energy device ready to go into production. I have been working on getting necessary working capital to make this happen which includes hiring of family sustaining jobs of engineering and marketing type roles. Only communication from GS was a form reply after a week giving me the same information foung on the website.
My WSJ communication received recognition and was published in the online version of the report on the 19th. Based on that report I was invited to appear on FOX Business Nightly Scoreboard with David Asman to discuss if the GS program would help small businesses like ours. Todate, there is no indication it will actually help small businesses secure any funds to actually benefit their companies as the ownership see fit.
I continue to hope this is not just PR, however to date it appears just that, a PR stunt to quite some critics.
Excellent and energetic article, Carol. Also, note that journalist Vanessa Drucker did a fine job of reporting on some of the moves Goldman Sachs is working on and how they are able to maintain their strong image in her article in FundStrategy Magazine, "Wall Street Giant Adapts to Survive." There she quoted the CEO Lloyd Blankfein, a former VPs Sharath Sury, and Stanley Fortgang.
http://www.fundstrategy.co.uk/wall-street-giant-adapts-to-survive/1000775.article
In my opinion, yes, GS is making a PR move, but so what? If it can help the small business community and entrepreneurs, more power to them.