Goldman plans to spread $100M of its wealth on rural businesses
Goldman Sachs on Friday announced plans to invest $100 million in rural communities across the U.S., deepening its efforts to bolster small businesses.
Driving the news: Beginning in North Dakota and Arkansas, the Wall Street giant's push will eventually reach small business owners in 20 states over the next five years.
- Meant to provide "comprehensive support" to Main Street, Goldman's commitment includes $75 million to community development financial institutions, with the remaining $25 million disbursed to educational programs at community colleges and capacity-building grants.
Why it matters: The post-pandemic era of high prices, wages and interest rates has not been kind to Main Street, which generates 44% of economic activity in America. Small businesses have struggled to adapt to multi-pronged pressures from costlier goods and services — as well as acute worker shortages, as the National Federation of Independent Businesses noted recently.
- Meanwhile, the Federal Reserve's interest rate hike campaign has hit small and medium sized banks the hardest.
- In addition to being major players in commercial real estate, these same institutions are the lifeblood of lending to small businesses, where financial conditions have tightened the most since the Fed began tightening nearly 2 years ago. The collapse of Silicon Valley bank exacerbated the problem.
Goldman points out that rural small businesses are frequently shortchanged when it comes to receiving public and private financing, even though the sector provides 85% of establishments and over 50% of employment in rural areas, a Small Business Administration study notes.
What they're saying: "Small businesses are engines of economic growth in our country and that's especially true in our rural communities," Goldman's Chairman and CEO David Solomon said in a statement.
- "I'm excited to expand our…program to provide more entrepreneurs with the training, tools and access to capital they need to create more jobs and drive our economy forward."
Zoom out: Goldman isn't the only big business name trying to build lasting bridges to a beleaguered Main Street. Steve Case, the entrepreneurial force behind AOL – arguably the old internet's most famous brand – has charted a new career path with Revolution Ventures.
- The firm provides venture capital to flyover country, part of an effort to "to stop the cycle of dollars flowing to the same type of people for the same types of ideas in the same types of places," according to Case.