A LITTLE penitence on Wall Street could go a long way with small-business owners.

Goldman Sachs (GS), the financial services powerhouse that played a role in the market’s collapse, pledged $500 million on Tuesday to help launch a new program designed to help small businesses grow and create jobs.

Under the 10,000 Small Businesses program, Goldman will make $200 million in charitable contributions available to community colleges to sponsor business education courses across the nation. Another $50 million in charitable funds, plus $250 million from Goldman’s own coffers, will be directed to support Community Development Financial Institutions, or CDFIs, which lend to needy businesses.

The program is designed to “unlock the growth and job-creation potential of 10,000 small businesses across the United States through greater access to business education, mentors and networks, and financial capital,” Goldman said in a statement. “It is based on the broadly held view of leading experts that a combination of education, capital, and support services best addresses the barriers to growth for small businesses.”

But which small businesses will benefit? Goldman hasn’t released any requirements for companies interested in vying for these funds, nor has the firm issued any specific requirements to the CDFIs with whom it’s partnering, according to a Goldman spokesman. However, small companies located in urban areas (and some non-urban areas) may be more likely to lasso funds because CDFIs tend to be based in cities and Goldman plans to rely heavily on their judgment.

“We’re not really in the business of small-business lending; that's why we’re working with CDFIs,” said a Goldman spokesman who agreed to talk on background for this story.

That’s not to say Goldman won’t be involved in those decisions. The program’s advisory board will choose, from among the nation’s 800 CDFIs, those from select cities that demonstrate what the Goldman spokesman called “a deep knowledge of local markets and relationships with the borrowers and businesses that are the least-served by the traditional banking system,” and a track record of supporting businesses that grow and succeed. That board includes Lloyd Blankfein, the chairman and CEO of Goldman Sachs, Warren Buffett, the CEO of Berkshire Hathaway (BRK.A) and Goldman’s biggest shareholder, and Michael E. Porter, a professor at the Harvard Business School.

 “I assume that some of the Porter analysis of inner city competitive market strategy will be part of [Goldman’s] strategy for which markets to invest in,” says Mark Pinsky, the president and CEO of the Opportunity Finance Network, a network of CDFIs, who is involved with the development of the program.

Porter, the founder and CEO of the Initiative for a Competitive Inner City (ICIC), a national nonprofit organization in Boston, has said that the only sustainable path out of economic distress is to leverage the existing assets in inner cities to enable them to participate in the market economy.

The first financial institution to receive money from Goldman will be Seedco Financial Services, a nonprofit group in New York that specializes in small business development assistance and providing loans to firms within economically distressed and underserved communities. The first loans under the program will be made in the first quarter 2010, Goldman said.

The first community college that is participating in the program, LaGuardia Community College, which is located in Queens, N.Y., will soon begin accepting applications for program-sponsored classes that start in early 2010. The courses are designed to teach practical business management skills such as accounting, human resources and management planning.

The program will also create a mentorship program in which Goldman employees, along with other business leaders, will help small businesses with guidance, technical assistance and networking. David S. Waddell, the CEO of investment strategy firm Waddell & Associates in Memphis, Tenn., says this piece of the plan could have a dramatic impact on businesses.

After completing the educational portion of the program, which will encompass roughly 100 hours of study, business owners will be paired with mentors who may come from Goldman’s staff or from one of its partner organizations, such as the National Federation of Independent Business, the National Urban League and Babson College, which is known for its entrepreneurial focus. The Goldman spokesman also said that businesses receiving CDFI funds may have a chance to pair up with a mentor.

The announcement, which came minutes after Blankfein said he and his firm had “participated in things that were clearly wrong and have reason to regret,” drew mixed reviews.

Some questioned Goldman’s motives, as it readies billions of dollars in year-end bonuses.

The Goldman spokesman says the firm has been working on the program for a year.

Although some critics barb that brokers may not have the chops necessary to help small companies thrive, they do have contacts that could come in handy, Waddell says. “Even if this is a PR stunt, I don’t care,” he says. “Those people are connected terrifically. A Goldman exec on your board of directors could be wonderful for small firms.”

-- Write to Diana Ransom at dransom@smartmoney.com

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