Mr./Madame President, as I come to the floor today, America’s Main Street businesses are suffering. With cash registers not ringing like they used to, exporting has become a practical solution for entrepreneurs looking to survive and grow.
What helps our entrepreneurs helps our entire economy. Every $1 billion of exports creates more than 14,000 high-paying American jobs. By creating jobs, as well as lessening the trade deficit, an increase in small business exporting will lead us out of this recession and make our nation better able to compete in the global marketplace.
Small businesses already play a vital role in America’s trade and commerce, representing 97 percent of all exporters. Yet, with only one percent of small firms exporting their goods – making up slightly more than a quarter of the country’s export volume – trade remains dominated by larger businesses.
A December 2008 report released by the U.S. Census Bureau and the Bureau of Economic Analysis noted that U.S. exports of goods and services grew by 12 percent in 2008 to $1.84 trillion. However, this same data showed that during the same time period imports increased 7.4 percent to $2.52 trillion. More involvement of our small businesses in exporting would be an enormous catalyst in reducing the country’s trade deficit.
As Chair of the Committee on Small Business and Entrepreneurship, I have heard from small exporters across the country. They’ve told me that the programs and services we have now at the Small Business Administration (SBA) are just adequate, but improvements are needed. With a few key changes to some of the export assistance and trade programs offered by the SBA, as well as a higher level of advocacy, I believe we can dramatically improve the tools available to small exporters while simultaneously increasing exporting opportunities for all entrepreneurs.
That is why today I am introducing the Small Business International Trade Enhancements Act of 2009. With this important legislation, small firms will have more opportunities to grow their businesses by expanding into international markets, creating jobs and strengthening our economy.
Like many small businesses, one of the biggest hurdles faced by small exporters is access to capital. The current economic conditions exacerbate this problem for small firms. The SBA offers several loan programs to help small exporters, but years of neglect under the previous Administration have sometimes rendered these valuable tools both unattractive and impractical for borrowers and lenders alike.
One of the SBA’s signature trade assistance products, the International Trade Loan (ITL) program, is a perfect example of this. This program allows exporters to borrow up to $2 million with $1,750,000 guaranteed by the SBA. Exporters can then use this money to help develop and expand overseas markets, upgrade equipment and facilities or provide an infusion of capital if they are being hurt by import competition.
While the original goal of this program is still very much on target with the needs of larger exporters, it has not evolved to meet the financing needs of small exporters in an ever-changing global economy. The volume of loans made through this program has dropped by more than 63 percent since 2003. The SBA’s other signature trade financing products – the Export Working Capital Program and the Export Express program – have also seen significant drop-offs in their loan volume, 26 percent and 23 percent respectively.
With a few small but significant changes to these programs, the SBA will be able to once again provide a user-friendly and attractive financing option that makes sense for both borrowers and lenders. One of the biggest problems with the ITL program, for example, is that a discrepancy between the loan cap and the guarantee often force borrowers to take out a second loan to take full advantage of the guarantee. Additionally, ITL’s can only be used to acquire fixed assets, rather than working capital, a common need for exporters. ITL’s also do not have the same collateral or refinancing terms as SBA 7(a) loans.
The provisions in this legislation create a more commonsense product by addressing these concerns. The bill raises the loan guarantee to $2,750,000 and the loan cap to $3,670,000, to make it consistent with the 7(a) loan program. Further, it makes the ITL program more flexible by allowing working capital to become an eligible use for loan proceeds and extends the same terms for collateral and refinancing as with the 7(a) loan program. The end result is a relevant and more practical tool for small exporters.
Making these simple changes to the SBA’s Export financing programs will go a long way toward helping small businesses find adequate export financing. The SBA International Trade and Export loans, however, leave borrowers without any assistance in identifying which loans are right for them. Local lenders that specialize in export financing can help get these products into the hands of the small exporters that need them the most, but they are not always the most effective means of doing so.
The SBA currently has 17 financial specialists posted throughout the country at one-stop assistance centers operated by the Department of Commerce. These specialists, at a minimal cost to the taxpayer, have facilitated well over $10 billion in exports in the last ten years, helping to create 140,000 new and higher-paying jobs. Unfortunately, under the previous Administration, this program suffered as well. My legislation would restore the staffing levels to what they were in 2002, establishing a floor of 22 financial specialists with priority staffing going to those centers – including one in my home, New Orleans – who have been without a finance specialist since 2003.
With more than 19 federal agencies involved in export and trade promotion, small exporters often don’t know where to turn for help. My legislation would help bring small business trade to the forefront in two ways:
First, it gives the SBA’s Office of International Trade (OIT) more resources and a higher profile within the Agency, making it directly accountable to the Administrator instead of part of the Office of Capital Access (OCA) where it is currently held. OIT is doing an adequate job now, but with my proposed changes, the office would have the potential to become a much more valuable partner and visible advocate for small exporters.
In addition to raising the level of advocacy within the SBA, my legislation reasserts the call for a special small business advocate within the Office of the United States Trade Representative (USTR). The USTR plays an important role in every aspect of trade in this country. While the Office claims to make small businesses a central focus, I believe more can be done to address the needs of our entrepreneurs during trade negotiations. I, along with my Ranking Member on the Small Business Committee, Senator Snowe, and Senator Schumer, reached out to Ambassador Kirk earlier this year asking him to create an Assistant Trade Representative focused on small exporters. Such a move would not be unprecedented. In fact, this very chamber called on the Office of the United States Trade Representative to create such a position more than 20 years ago.
The Small Business International Trade Enhancements Act of 2009 is an important first step toward ensuring that small firms will have more opportunities to grow. By increasing exporting opportunities for small businesses, we will help them expand into international markets, create new and higher-paying jobs and strengthen the economy. I have heard from some of the members of my Committee, and I know how important this issue is to many of them, including Ranking Member Snowe.
The 111th Congress will be the third consecutive Congress that I have introduced this particular legislation. I introduced it in the 109th Congress as S.3663 and in the 110th Congress as S. 738. In these previous Congresses we have had some success in moving the bill through committee, but as with other SBA reauthorization legislation, it stalled in the full Senate. As Chair of the Small Business Committee this Congress, I have made increasing small business export opportunities one of my top priorities. With this in mind, I will work closely with Ranking Member Snowe and the other Committee members in the coming months to get this legislation to the President’s desk.