Goldman Sachs Announces $500M in Aid to Small Business

Lords of high finance may seem unlikely sources of aid for small businesses. But Goldman Sachs (GS), along with Warren Buffett and several education and nonprofit groups, today announced a $500 million charitable project to aid small businesses over five years.

Goldman will invest $300 million in community development financial institutions, lenders that focus on economic development in low-income neighborhoods. The program will also provide $200 million in scholarships for business owners to get training at community colleges and other institutions. Loans and classes funded through the program are set to begin early next year.

The initiative, dubbed 10,000 Small Businesses, seeks to drive smalll business job growth by combining business education, mentoring and networking, and access to capital. Goldman is partnering with respected small business organizations, including the Initiative for a Competitive Inner City, which focuses on small business development in underserved areas.

Buffett (who is Goldman’s largest investor) will sit on the program’s advisory council along with Goldman CEO Lloyd Blankfein, ICIC founder and Harvard professor Dr. Michael Porter, and a dozen other leaders from the business and educational communities.

The plan may be as much about softening Goldman’s image as helping small business. The firm faces sharp criticism and public anger over doling out bonuses just a year after taking $10 billion in bailout money, which it has since repaid. (Goldman still enjoys other government guarantees and benefited from the bailout of AIG.)

While much of the economy struggled through 2009, Goldman recorded three booming quarters after taking a loss at the end of last year. The firm reported net income of $3.2 billion in the most recent quarter, and has set aside $16.7 billion for compensation.