DETROIT – Michigan Governor Rick Snyder, Detroit Mayor Dave Bing and Goldman Sachs CEO Lloyd Blankfein announced, on Tuesday, Nov. 26, a $20-million partnership to bring the Goldman Sachs “10,000 Small Businesses” initiative to Detroit in order to help create jobs and economic growth.  

The “10,000 Small Businesses” Advisory Council Co-Chairs Warren Buffett and Dr. Michael Porter were also present at the announcement, as were local program partners.  

Buffett said he expects the market for Detroit’s debt to pick up again and bond insurers to begin backing the debt once the city submits an appropriate recovery plan to bankruptcy court.

Buffett’s Berkshire Hathaway Assurance Corp. re-insured more than $380 million of Detroit’s secured sewer debt that was originally insured by Financial Guaranty Insurance Co. 

Speaking at a Goldman Sachs event to promote entrepreneurship in Detroit, the Berkshire Hathaway chairman and chief executive said the market for Detroit’s debt would pick up “as soon as a plan comes through that makes sense.”

Detroit still has assets that appeal to investors, Buffett said. “The resources in terms of the people, the businesses, the history and the culture are all here to have a great city in the future,” he said. “And it will require probably some sort of plan to readjust the debt of the past and ongoing expenses.”

Defaults by Detroit since June on its pension debt and some of its general obligation bonds have worried the municipal bond market, where states, cities, schools and others borrow money. 

The Goldman Sachs “10,000 Small Businesses” initiative will have thee major offerings.  

Goldman Sachs CEO Lloyd Blankfein (L), Pamela Rodgers (2nd L), owner of Rodgers Chevrolet, Warren Buffett, co-chair of the 10,000 Small Businesses Advisory Council, and businessman Dan Gilbert (R) take part in a panel discussion following a news conference announcing a $20 million partnership to bring Goldman Sachs’ 10,000 Small Businesses initiative to the city of Detroit, Michigan November 26, 2013. REUTERS/Rebecca Cook

First, it will provide business and management education programs, where small business owners will have access to a practical business education, allowing them to develop a business growth plan to help them increase revenues and hire new employees.  The education program will be delivered in partnership with Macomb Community  College, Oakland Community College and Wayne State University. 

Second, the initiative will offer access to capital as Goldman Sachs is committing $15 million of lending capital to support the small business community in Detroit and the surrounding region. The financial firm intends to provide funding to two intermediaries – Invest Detroit Foundation and Detroit Development Fund, which will use the funds to provide loans to small business owners in the area.  

Finally, the program will deliver business support services.  Business advice, technical assistance and networking will be offered to participating small business owners through partnerships with community-based partners and national business organizations, as well as the people of Goldman Sachs.

“With practical business education and capital, small business owners in Detroit have a much better chance of growing their businesses and contributing to the economic recovery of the city,” said Blankfein.

Goldman Sachs “10,000 Small Businesses” is a $500 million program and is active in urban and rural communities across the United States, including Chicago, Cleveland, Houston, Long Beach, Los Angeles, Miami, New Orleans, New York, Philadelphia and Salt Lake City. 

Access to capital is also available in parts of six states: Kentucky, Montana, Oregon, Tennessee, Virginia and Washington.  

Across the United States, initial results of the education program have shown that just six months after graduation over 60 percent of participants reported an increase in their revenues and nearly 50 percent have reported creating more net jobs.  In addition, the program has a 99 percent graduation rate and 80 percent of graduates are doing some form of business with each other.

A consortium of higher education institutions, consisting of Macomb Community College, Oakland Community College and Wayne State University, will deliver the program and will work with local organizations to encourage small businesses to apply for the education and/or capital program components and to provide technical assistance to program participants.  Organizations such as Midtown Detroit, SBTDC, Michigan Minority Supplier Development Council, DEGC, Detroit Regional Chamber, TechTown and Eastern Market will be key partners in both helping with the recruitment of small business owners and entrepreneurs in Detroit and in providing outreach and business support services.

Goldman Sachs intends to provide funding to two intermediaries – Invest Detroit Foundation and Detroit Development Fund – which will use the funds to make loans to small business owners in the area.  Each organization has over 15 years of experience providing capital and technical assistance to support small businesses and community development real estate projects.  Invest Detroit Foundation will focus its lending to businesses in the core of Downtown Detroit, while Detroit Development Fund will focus its lending citywide. 

The program will begin in March 2014. Applications for the education component of the program are currently being accepted and can be downloaded at www.10ksbdetroit.com.  Classes are free to business owners accepted through a competitive application process.