(Washington, DC) — Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-Md.) today called for improvements to the U.S. Small Business Administration’s (SBA) export promotion programs, including the State Trade Expansion Program (STEP), the Export Express Program, the Export Working Capital Program and the International Trade Loans Program.
“We know that small businesses are the growth engines of America—that’s where jobs are created and innovation takes place. We also know that so many small businesses are not engaged in international trade even though their products could be in demand. And we also know the global marketplace is where most consumers are, so it only makes sense that we connect small businesses to the global market,” Ranking Member Cardin said during his opening statement.
With their narrow-margins and smaller staffs, small businesses often struggle to navigate international markets, which represent 95 of all global consumers. The struggles small businesses face explain why only 1 percent of the 30 million small businesses in America export their products.
Congress created STEP in 2010 to increase opportunities for small businesses to engage in international trade. The program awards grants to state economic development agencies so they can help small businesses attend international trade shows and connect with customers in foreign markets. The grants also allow economic development agencies to provide counseling and training to help small businesses understand the rules of international trade.
In addition to STEP, SBA helps small businesses enter international markets through the following programs:
- The Export Express Loan Program, which provides loans of up to $500,000 to small businesses that are in the early stage of the exporting process.
- The Export Working Capital Program, which provides loans of up to $5 million to small businesses to cover the cost of international purchase orders. The loans allow small businesses to expand into international markets without disrupting their domestic financing and business plan.
- The International Trade Program, which provides loans up to $5 million to small businesses that regularly engage in international trade so they can expand their production capacity.
In total, the programs led to $3.1 billion in export sales for small businesses in Fiscal Year 2018. STEP is especially successful, with a recent performance report finding that the program generated more than $500 million in export sales and assisted more than 7,000 small businesses nationwide. The report also found that STEP returns more than $31 in sales for small businesses for every dollar invested in the program.
Cardin continued, “STEP is an invaluable resource for American small businesses, which is why we must take every opportunity to improve the program so it can help more of them…”
While STEP is a great value to states, a GAO report released last month found that state economic development agencies face several obstacles in administering STEP grants—including cumbersome red tape, inconsistent communication and inflexible requirements.
Cardin pressed SBA Associate Administrator for International Trade David Glaccum, who testified on the first of two panels during the hearing, about the difficulties state economic development agencies face in accessing STEP, asking, “I’ve heard from [state] economic agencies about the burdensome application process. They say it can top out over 100 pages. It seems to be a bureaucratic challenge for many economic agencies to request these grants. Are you looking at the process to see whether we can streamline that [to] make it more cost effective for the agencies that are applying for the grants?”
Mr. Glaccum responded, “…we are looking at that and since I’ve been [at SBA], our team is dedicated to streamlining that process—our STEP team—and we are seeing what things we can potentially reduce…”