Goldman Sachs and 10,000 Small Businesses

Posted on December 22, 2009

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On Tuesday, November 17, Wall Street juggernaut Goldman Sachs Group, Inc. announced its new “10,000 Small Businesses” plan. The initiative, meant to provide education and mentoring for small businesses while also offering support to underserved markets, earmarks 500 million dollars to be spent over the next five years.

Since the announcement, the offices of Goldman Sachs have been flooded with calls and e-mails from small business owners looking for advice and infusions of capital to stay afloat. Unfortunately, what most small businesses will get from Wall Street is access to certain educational programs but little cash. According to Mike Spector of The Wall Street Journal, “Goldman plans to seed only those companies employing at least four full-time employees and with revenue from $150,000 and $4 million in the most recent fiscal year. Eligible companies have been operating for at least two years and work ‘predominantly in underserved markets.’”

While Goldman has generated much press and interest in its “10,000 Small Businesses” plan, not all of the attention has been positive. Many experts feel the measure is too little too late for a firm that partly generated and profited from the credit crisis currently putting a crunch on so many small business owners. Spector also acknowledges that “Goldman’s five-year gift will be a drop in the bucket compared to a nationwide decline in small-business lending since last year.”

A recent editorial in The New York Times expressed anger towards Goldman Sachs for what if viewed as a “non-apology.”

When announcing “10,000 Small Businesses,” Lloyd Blankfein, chairman and chief executive of Goldman Sachs, also said, “Certainly, our industry is responsible for things. We’re a leader in our industry, and we participated in things that were clearly wrong and have reason to regret. We apologize.”

The letter-writer went on to add that “he never actually said what he was sorry for (‘things’ doesn’t cut it) or to whom he was apologizing.”

Others see the plan as a transparent PR move for a company that has provided 16.71 billion dollars in compensation to its employees so far this year while many states (Alabama included) reach double-digit levels of unemployment.

Regardless of the potential span and success of the Goldman plan, most small business owners continue to struggle in this economic client. Gary M. Busch, a small business owner who spoke to The Wall Street Journal said, “’It’s really frustrating … I think lenders that are giving money feel that it’s safe to give $100 million to a $1 billion dollar company that’s going bankrupt,’ but not one ‘that needs $1 million and will probably make it.’”

For more information:

Goldman, Buffett Team to Aid Small Businesses

Small Businesses Turn to Goldman

Goldman’s Non-Apology

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