David Solomon Interviews BP CEO Bernard Looney...Deploying Capital to Small Businesses...Retailers Move Into 'Uncharted Territory'

[Goldman Sachs]( [BRIEFINGS] May 19, 2020 Talks at GS With BP CEO Bernard Looney Above (L to R): David Solomon of Goldman Sachs and Bernard Looney of BP Since taking the helm at BP in February, CEO Bernard Looney has guided the company through one of the most challenging periods the energy sector has ever faced, including a historic collapse in oil prices and a breakdown in the OPEC+ alliance. In a recent Talks at GS episode with Goldman Sachs CEO David Solomon, Looney discussed the longer-term questions that will shape the future of the oil and gas industry. “There are many questions on the supply side: What will happen to the shale business in the United States? Will the OPEC+ alliance hold together?” Looney said. “But for me…the real unknown is around the demand side and what's going to happen there. And the real question, I guess, is whether these changes in behavioral patterns that we're all experiencing…will [they] stick? Will people travel less? Will they fly less? Will there be more virtual meetings? I think some of it will stick, but the honest answer is we don't know…So we focus then on the things that we do control: costs, capital—all of that good stuff.” Among the priorities that Looney continues to emphasize is BP’s goal of becoming a net zero company by 2050 or sooner. “The trend in the world to a world that's demanding clean, reliable, affordable energy—I think that’s unstoppable and I don’t think this pandemic slows it down and it potentially speeds it up,” he said. "We are absolutely committed to what we laid out. It deepens my commitment, in terms of the pandemic. It may make it a little bit more challenging in the coming months here, as we work our way through the financial situation. But I think this direction is unstoppable.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Talks%20at%20GS%20With%20BP%20CEO%20Bernard%20Looney&body=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3D0WWxsYy_Kqw) The State of Goldman Sachs’ Small-Business Lending Goldman Sachs has made a $500 million capital commitment to the Paycheck Protection Program, or PPP, to help small businesses stay afloat during the crisis. On today's episode of Exchanges at Goldman Sachs, Margaret Anadu, head of the firm’s Urban Investment Group, provides an update on the more than 8,000 loans to small businesses that the firm has helped facilitate across the country through partnerships with community development financial institutions (CDFIs) and other mission-driven lenders. The majority of the funds, Anadu said, have gone to businesses that initially struggled in applying or getting approved for PPP loans because they were deemed too small or were unfamiliar with the loan application process. The average loan size to date has been about $61,000—or less than half the size of the average PPP loan nationwide—to businesses with a median count of three employees. This [infographic]( provides a breakdown on how Goldman Sachs' $500 million in loan capital has been distributed. Thirty-three percent has been disbursed to low-income neighborhoods, and roughly half deployed to businesses in minority-dominated areas. “So when we take all of these figures together, we believe they validate the importance of supporting these community lenders, who are successfully reaching some of the hardest hit people and places, including mom-and-pop businesses, during this difficult time,” Anadu said. “And a lot of what we’re most proud of doesn’t come through in the aggregate numbers. We’ve received countless notes from businesses who were surprised and even sometimes emotionally overwhelmed that our mission-driven lenders would spend real time with them to understand the program, fill out the application and be there as a resource throughout the process.” [Listen to podcast]( [View infographic]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20State%20of%20GS%20Lending%20to%20Small%20Businesses&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fexchanges-at-goldman-sachs%2Findex.html) The Daily Check-In With Goldman Sachs As parts of the US begin to reopen, retailers are moving into “uncharted territory,” said [Jen Davis]( head of retail investment banking, in a recent episode of The Daily Check-In with Goldman Sachs. One of the biggest unknowns is the change in consumer behavior: “What happens to traffic, and do customers come back and start shopping again in-store? Or has the habit of online shopping become so pronounced in this environment that there’s a continued massive secular shift to e-commerce?” Davis asked. Retailers who have invested in their digital and e-commerce operations will be better positioned in the months ahead, she added. “Those alternative distribution [operations will be a] key item of focus going forward.” In other episodes of The Daily Check-In, we heard from Goldman Sachs Research’s Chief Credit Strategist [Lotfi Karoui]( on the state of corporate credit markets; and [Axel Hoefer]( head of the Investment Banking Division’s auto industry coverage in Europe, on the impact of coronavirus on consumer demand and the industry’s global supply chain. For more Daily Check-In videos, subscribe to our [channel on YouTube](. SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20With%20Goldman%20Sachs&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fthe-daily-check-in%2Findex.html) Briefly…on Getting Capital to Small Businesses Bill Bynum is the CEO of HOPE, a Community Development Financial Institution (CDFI) in Jackson, Mississippi, with whom Goldman Sachs is partnering to get capital in the hands of small businesses. Margaret Anadu, head of the Merchant Banking Division’s Urban Investment Group (UIG) at Goldman Sachs, spoke recently with Bynum about the status of those efforts. Margaret Anadu: Through 10,000 Small Businesses and UIG, we have partnered with CDFIs for over a decade to create stronger, more inclusive communities. Bill, as the CEO of a CDFI in Jackson, Miss., can you explain what makes CDFIs different from traditional banks? Bill Bynum: CDFIs can take on many forms—from nonprofit housing and business loan funds, to regulated banks and credit unions. Some are small and hyperlocal, while others are large, complex national intermediaries. What sets them apart from traditional financial institutions is a primary focus on providing tailored products and services designed to improve conditions for low-income, minority and other financially underserved people and places. CDFIs commonly serve as financial advisors for their customers, providing a range of assistance such as starting a banking relationship, securing financing, and saving for the future. CDFIs have existed for generations, but took a major step forward in 1994 with the establishment of the US Treasury Department’s CDFI Fund, which has certified more than 1,000 CDFIs across the nation. Margaret Anadu: Bill, can you talk about who HOPE serves and how the crisis has impacted your community? Bill Bynum: Over the past 26 years, HOPE has worked to reduce the extent to which race, gender and birthplace limit one’s economic potential, and has reached more than 1.5 million people across Alabama, Arkansas, Louisiana, Mississippi and Tennessee. The pandemic has exacerbated this region’s long history of poverty and racial disparities. For example, in Mississippi, more than half of all households, and 70% of black households do not have savings to make ends meet. Moreover, the Economic Policy Institute estimates that private sector losses in the Deep South will exceed the national average, driven by the disproportionately high number of leisure, hospitality and retail jobs, which already pay far less than other industries in the region. Without help, including the basic financial resources we provide, these already fragile families and their communities will struggle to survive. Margaret Anadu: What were the biggest hurdles in getting Paycheck Protection Program (PPP) capital out and how did you overcome them? Bill Bynum: The stresses and strains of implementing a mammoth new program in a short time left no one untouched, from the Small Business Administration and lenders, to the employers seeking assistance. One key lesson learned is the importance of clear, widely circulated guidance for small businesses. According to the National Minority Supplier Development Council, more than a third of minority businesses cited inadequate information or a lack of clarity as an impediment to the PPP application process. Potential borrowers received varying interpretations regarding their eligibility and forgiveness. Several PPP applicants to HOPE reported being left in limbo after other lenders prioritized existing and larger customers, set minimum loan amounts, or failed to notify them of their status. Smaller businesses and sole proprietors faced even bigger challenges, as many lacked ready access to the necessary records, or otherwise needed help navigating the application process. In response, HOPE collaborated with elected officials in New Orleans, Birmingham, Jackson and Montgomery, and nonprofit organizations across the South to mobilize a rapid response team that provided technical assistance to hundreds of PPP applicants. As a result, through May 11 HOPE had approved more than 1,000 PPP loans to small businesses, churches, private colleges and other vital employers across the Deep South. Our median loan size is less than $12,000, and 75% are smaller than $25,000. Margaret Anadu: What more do you think needs to be done and what’s your view on how businesses in your community will be able to manage through the crisis? Bill Bynum: While PPP has helped many employers, tens of thousands more are in need of a financial lifeline. This is particularly true for mom-and-pop businesses and nonprofits that provide critical services in low-income communities, and businesses owned by people of color. Traditional financial institutions often acknowledge that they are not always well structured to serve low-income markets. This is why CDFIs exist—to be the first responders in the financial system for underserved people and places. And federal policymakers should follow suit by allocating funding that equips CDFIs to do what they do best—serve those who teeter on society’s financial edge. Bold actions such as these would be a major step forward in building an economy that truly works for all Americans. SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly%E2%80%A6on%20Getting%20Capital%20to%20Small%20Businesses&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fpages%2Ffrom_briefings_19-may-2020.html) Goldman Sachs Media Highlights Yahoo! 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