Will Congress Reauthorize the U.S. Export-Import Bank?

By Justin Fisk, CSG Washington, D.C., Office
Access to export capital continues to be one of the largest barriers for American small business exporters. While the federal government does have successful programs for helping small businesses find the financing necessary to become exporters, another potential Congressional roadblock is showing the importance of state programs to keep goods moving.
The U.S. Export-Import Bank, also known as the EX-IM Bank, is the official export-credit agency of the United States. The bank’s mission is to support American jobs by facilitating exports of domestic goods and services through direct loans, loan guarantees, working capital and export credit insurance.
In 2014, the EX-IM Bank authorized $20.5 billion in financing to support $27.4 billion worth of U.S. exports. This financing helped support more than 164,000 American jobs, with 90 percent of the transactions directly helping small businesses. More importantly, the EX-IM Bank generated a surplus of $675 million in 2014.
Nevertheless, the EX-IM Bank is facing a legislative battle in Congress to extend its charter past June 30. Senate Majority Leader Mitch McConnell of Kentucky promised earlier this year that an EX-IM Bank reauthorization bill would reach the Senate floor before its expiration date. In the House of Representatives, Congressman Jeb Hensarling of Texas told Politico that the EX-IM Bank is “a corporate giveaway program for foreign corporations and state-owned businesses like Russian banks, Chinese airlines and Saudi oil companies.”
Supporters of the bank assert that without reauthorization from Congress, the EX-IM Bank would not be able to support thousands of firms looking to export. According to a 2015 survey by the State International Development Organizations, the most significant obstacle for businesses regarding access to export capital is the lack of participation from private lenders.
The Small Business Administration also plays an important role in providing financing to small businesses, albeit on a smaller scale. Its International Trade Loan program offers a combination of fixed asset, working capital and debt refinancing with a maximum guaranty of 90 percent of the total loan amount.
With Congress gridlocked and the EX-IM Bank nearing its expiration date, many cash-strapped state governments have found innovative ways to help their small businesses find export capital.
Florida
In 1993, Florida policymakers established the not-for-profit Florida Export Finance Corporation. The corporation is mandated to “expand employment and income opportunities by supporting the export of goods and services from the State.” It does this by providing small businesses access to direct loans up to $50,000, or loan guarantees of up to $500,000.
Rather than being in competition with federal agencies like the EX-IM Bank or the Small Business Administration, the Florida Export Finance Corporation works closely with its federal partners. Due to its partnership with the EX-IM Bank, for example, the Florida not-for-profit can increase its loan guarantee to up to $1 million.
Washington State
The Washington state legislature created the Export Finance Assistance Center of Washington in 1983. Rather than providing loan and credit guarantees for businesses, it offers free export finance advice and counseling assistance to Washington businesses. In addition to helping companies navigate the financial services available at the EX-IM Bank and the Small Business Administration, the center also has experts in credit insurance, letters of credit and foreign exchange rates.
New York
New York Gov. Andrew Cuomo announced last year the development of the Global New York Development Fund. Touted as the first state export-import bank, this initiative will develop a $25 million lending program through the Empire State Development Fund, which will work in conjunction with 20 private-sector lenders to leverage more than $50 million of additional funding. These new loans will be available for small and medium-sized enterprises that have difficulty obtaining the private-sector financing needed to enter new markets.
Cuomo also announced the development of a $10 million grant fund aimed at providing small businesses with up to $25,000 to help develop export marketing plans, product adaptation, market certification and website translation. In addition, the fund seeks to work more closely with the U.S. Export-Import Bank to help New York businesses obtain export financing of up to $500,000.
 

 

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