Mr. Chairman, Ranking Member and distinguished Members, thank you for inviting me to testify on the Trade Promotion Coordinating Committee’s (TPCC) National Export Strategy and the role that the U.S. Small Business Administration (SBA) plays in the federal government’s export promotion strategy.
I would first like to recognize the outstanding leadership of Secretary Evans. The SBA has been working closely with the Department of Commerce, Export-Import Bank of the United States (Ex-Im Bank), the Overseas Private Investment Corporation (OPIC), and other TPCC agencies in developing recommendations for the National Export Strategy that incorporate small business issues in order to grow them to be the most competitive in the world.
Small businesses create two-thirds of new U.S. jobs, are responsible for much of our economy’s innovation and generate over half of our private gross domestic product. But while most – 66 percent – of U.S. exporters have fewer than 20 employees, fewer than one percent of our small businesses export. Proportionately far more small businesses export in other countries, where governments dedicate far more resources to export promotion, but more importantly take a more strategic and holistic approach. Most of our trading partners offer more comprehensive support for small companies – providing assistance from beginning to end of the export process, and combining their trade and investment services.
The TPCC conducted a formal survey of 3000 U.S. small and medium-sized businesses to determine what was needed for them to be more competitive in the global marketplace. The survey found that small companies face more hurdles exporting than large companies. Specifically, small businesses need good information and expertise in a way that does not require large resources of time. Small businesses also need capital. SBA is a resource for these needs.
The National Export Strategy presented by the TPCC recommends "a government that provides better customer service through joint promotion, training, trade finance and information delivery." In order to meet the need to create a "one-stop-shop" approach, we have enhanced our working relationships with our partners in the following ways:
SBA and Ex-Im have entered into a "Small Business Initiative" Memorandum of Cooperation. The first phase of this initiative will be to leverage marketing resources across SBA and Ex-Im to raise awareness among lenders and exporters. Another part of the initiative is to make our financing products more compatible, flexible and streamlined, so that one application form can be used for either agency’s loans.
SBA and Commerce are working more closely to coordinate marketing and outreach efforts to the U.S. small business community in the delivery of both technical and financial assistance programs. The SBA’s and Commerce’s national network of service providers will collaborate and work in partnership to provide significantly improved counseling, training and financial assistance activities while also forming a more efficient and transparent delivery system for these services. We are already making great strides in cross-training. For example, in recent months, SBA has participated in Commerce’s annual regional meetings of Senior Commercial Officers and have begun the process of training them on SBA’s International Trade loan programs.
Another example of our efforts in leveraging our partnerships to further promote export opportunities for U.S. small business will be the Small Business Initiative between SBA and OPIC that will focus on cross-training and outreach to provide the necessary tools and products needed to invest internationally. We look forward to formalizing this opportunity in the very near future.
After reviewing our existing International Trade loan programs and the recommendations from the National Export Strategy, SBA increased the Export Express loan guaranty to a new maximum of $250,000. The SBA Export Express loan guaranty program can be used to finance small businesses’ export development costs such as participation in a foreign trade show or translation of product catalogs, as well as finance actual export orders.
The Export Working Capital Program (EWCP) is another of SBA’s International Trade loan programs. It allows SBA to guaranty up to $1 million of a lender’s working capital loan to eligible small businesses for export purposes. A small business that has prospered with SBA’s EWCP assistance is M.A.S. Exports Ltd. of Savannah, Georgia. M.A.S. Exports is a supplier of auto parts and lubricants. Clifford King, President and owner, decided three years ago to use an SBA export loan to help finance additional business to his offshore customers primarily in the Caribbean and Latin America. King’s company, through a $250,000 revolving line of credit for export shipments under the SBA’s EWCP, reached annual sales of $970,000 in 2001.
SBA is also a partner in many of the President’s E-Gov initiatives to make information available on-line 24/7. We are currently working together with Commerce to strengthen our links with Export.Gov and also looking at enhancing SBA’s International Trade website to allow the customer to access information at the time and place of his/her convenience.
SBA currently provides information to small businesses through our Export Trade Assistance Partnership (E-TAP). E-TAP is a training program offered at each of the 19 U.S. Export Assistance Centers (USEACs) and some Small Business Development Centers (SBDCs), which combined with ongoing individual business counseling, offers effective and customized assistance to new-to-export companies looking to enter the global marketplace. We are looking at ways of increasing the number of E-TAP programs being offered by encouraging our resource partners to implement the program.
SBA is fully committed to this National Export Strategy. We believe that the recommendations in this report will help to streamline and improve federal export assistance programs and benefit U.S. small businesses so that they will continue to be the most competitive companies in the world.
I look forward to SBA’s ongoing contribution to the TPCC and our commitment to evaluate and better coordinate our programs. I would be happy to answer any questions you may have. Thank you.
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