By Elizabeth Dilts Marshall
NEW YORK (Reuters) – Goldman Sachs Group Inc <GS.N> Chief Executive David Solomon said Thursday Goldman is committing $250 million from its balance sheet to community development financial institutions in the U.S. so they can make loans to small businesses hurt by the coronavirus pandemic.
The Wall Street bank will put the loan money to work through these government-sponsored community financial institutions, rather than make the loans itself, because CDFIs “are very effective at reaching the small businesses that often don’t have access to credit at the major banks,” said Goldman spokesman Jake Siewert.
Congress last week passed a $2 trillion stimulus package that included $349 billion for loans to small businesses. However, thousands of U.S. banks have said they may not participate in the lending program because of the legal and financial risks involved.
The federal government wants banks and other institutions to get the loan money into the hands of small business owners fast, as many have closed shop or lost significant revenue because of the widespread stay-at-home orders, which are in place to limit the spread of the virus.
Separately, Goldman said it is giving $25 million in grants to CDFIs to “ensure they have the necessary capacity to underwrite and deliver loans to small businesses as soon as possible,” according to a statement released by the bank.
The bank is also donating $25 million to a relief fund it set up internally, which will provide assistance to front-line healthcare providers, medical research, and economic relief to those who have lost work or childcare resources due to the virus.
(Reporting By Elizabeth Dilts Marshall)