Dear Lloyd:

I read about your kind offer to spend $500 million to help 10,0000 U.S. small businesses by underwriting continuing education courses for them at local colleges and giving money to community-lending institutions for loans. I'm certain this offer is sincere. However, as someone who has tried launch a small business and who has many small-business owners as friends, I can assure you that most of them don't need any community college course to learn how to make money.

No, their needs are far more mundane. They need cheaper health insurance for their employees. They need lower taxes on their revenues. They need more earnings to pay their employees a fair living. They need funds to buy supplies because their credit lines have been eliminated and their vendors are demanding COD payments. In short, they need more money, not more schooling.

Maybe you should flat-out give them some of your money instead of setting up a plan to teach them how to run their businesses? I mean, Goldman Sachs (GS) was all too happy to take what was in effect a gift from U.S. taxpayers when it received government-funded payments from the AIG bailout that inexplicably made counterparties like Goldman 100% whole on paper debts worth nothing.

For the Rest of Us

After all, Goldman Sachs seems to have a lot of money these days. Enough to pay its employees nearly $700,000 in 2009, on average, all in. That's more than seven times the net salary of the average small-business owner in America. And it's a very nice chunk of change for a job that, thanks to the U.S. Treasury Department, has zero risk of losses or defaults. (You are too big to fail, right?)

I'm sure we all would love to have a job that paid nearly a million dollars per year and is, in effect, guaranteed by the federal government. But most of us don't work on Wall Street (where the unemployment situation actually isn't that bad, we hear, and don't get swine flu vaccines before everyone else).

No, most of us just pray that we can afford to send our kids to college and that we don't get sick because we might run out of money even if we have health insurance. (I am not certain of this, but I would imagine that the percentage of Goldman Sachs employees who lack health insurance is zero -- which hasn't stopped the bank from trashing the current health care reform efforts).

A Down Payment on Future Growth

So I have a better idea for you, Lloyd, and your $500 million -- and your billions in bonuses. Why don't you take that money -- and the more than $5 billion that you got from a cowed Treasury Department -- and pay it back to small businesses. All of it. Consider it a down payment on future economic growth and recovery that will benefit Goldman as much as any other entity.

And consider yourself very lucky because you would have returned what was in effect a gift from the taxpayers without paying any interest or giving up any stake in your company.

With that $5.5 billion, you could pay $11,000 in cold hard cash to 500,000 U.S. businesses. For many of them, and for their employees, this could be the difference between survival and bankruptcy. Credit remains frozen solid for small businesses. Any company that needs to buy widgets and pay for them before it sells them at a profit needs a line of credit to survive. And the inability of small businesses to get credit and grow is at the root of the ongoing economic malaise. Those that have access to credit face soaring interest rates, not to mention health insurance costs going up at almost 20% per year.

While Goldman can piously claim it's doing God's work by offering capital to big businesses that need to grow, the reality is, according to the Small Business Administration and a variety of economists, two-thirds of all net job growth in the U.S. in the past 15 years has come from small businesses. Last time I checked, Goldman didn't have an SBA loan operation (even though it does enjoy the protected status of a bank and the nearly 0% interest rate on special government loans afforded to banking institutions by the Federal Reserve).

Pride Instead of Shame?

Even if Goldman decides to make the country whole and stimulate growth by truly helping small businesses, Lloyd, you'll still be able to pay your employees nearly $400,000 per year on average, based on your projected 2009 bonus pool. Goldman employees might not be able to buy a bigger house in the Hamptons, but they would be able to publicly state their employer's name without fear. And Goldman's shareholders might applaud the move as highly strategic because the gathering political storm could well allow Washington politicians to break a "too big to fail" Goldman into little pieces.

Lloyd, it's up to you. Most U.S. small businesses have empty cupboards, let alone empty stockings, this holiday season. Unemployment is probably headed to 11%, and many Americans will never financially recover from this mess that left Goldman in a stronger financial position than ever before. But just think: If small biz, the U.S. economy's engine, gets a boost from the former Grinch whose heart has suddenly grown several sizes larger -- now that would be a heck of a Christmas story.

Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at alex@dailyfinance.com.


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