The Goldman Sachs Group Inc. is providing $50 million to be used for small business relief loans administered across the state by community development financial institutions.
Gov. Greg Abbottannounced the partnership April 13. Money will be disbursed through the Paycheck Protection Program, or PPP, a new federal tool that small business owners can use to cover payroll and other expenses.
The CDFIs involved include San Antonio-based LiftFund, which will receive $25 million. Goldman Sachs is "actively working" to work with other banks to lend the remaining $25 million, said John Wittman, communications director for Abbott. Austin is home to a number of CDFIs, such as PeopleFund. They are private financial institutions that lend to low-income and disadvantaged populations.
LiftFund is also active in Austin. It made six loans for a combined $3.5 million through the U.S. Small Business Administration 504 program in fiscal 2019.
Goldman will allocate the money to the CDFIs, such as LiftFund, which are already certified by the federal government for small business lending.
"Small businesses and their employees are at the heart of the Texas economy, and they need support during these difficult times,” Abbott said in a statement. “These loans will help us revitalize our economy and restore Texans’ livelihoods as we respond to COVID-19."
Goldman (NYSE: GS) said it is giving the money through its 10,000 Small Businesses program, a nationwide initiative that predates the coronavirus outbreak and is designed to lift up entrepreneurs across the country with education and funding. The New York-based investment bank has committed to providing a total of $550 million in COVID-19 relief.
"Goldman Sachs understands that our communities and economy rely on small business and we are doing everything we can to support this vital engine of economic growth and employment," John Waldron, president and chief operating officer of Goldman Sachs, said in a statement.
The PPP is designed as a lifeline for businesses seeing a sudden fall in revenue. Businesses with up to 500 employees can apply for up to $10 million, with the loan backed by the SBA. The program provides two-year, fixed-interest-rate loans, which can be fully forgiven if 75% of the money is used to cover payroll expenses. All loans have a fixed interest rate of 1%.