ACCION Kathleen Mayes, left, runs a Cajun food business in San Antonio, Texas, called Louisiana Purchase

Ammar Askari, Community Development Expert, Office of the Comptroller of the Currency

In January 2010, the White House announced the National Export Initiative (NEI), a multi-year effort to expand U.S. jobs by increasing the number of companies exporting and by expanding the markets to which U.S. companies sell. Although more than 97 percent of U.S. export companies are small businesses with fewer than 500 employees, less than 1 percent of all small businesses engage in exporting.

In September 2010, the administration’s Export Promotion Cabinet, which was created to help implement the NEI, published its Report to the President on the National Export Initiative. The report lays out eight recommendations for reaching the initiative’s goals. “Exports by small and medium-sized enterprises (SME)” is priority number one.

One of the cornerstones of the NEI was the passage of the Small Business Jobs Act of 2010 (SBJ Act). Signed by the President in September 2010, the SBJ Act includes numerous provisions designed to support and promote exports by SMEs.

“What the SBJ Act did is emphasize the important role small businesses play in U.S. exports,” says Richard Ginsburg, Senior International Trade Specialist at the U.S. Small Business Administration (SBA). “By dedicating significant additional resources to small business export promotion, the SBJ Act prominently positioned the SBA and its programs in this important effort.”

The SBA provides small businesses with access to capital and offers education, development, and technical assistance. The SBA’s export-oriented loan programs include Export Express, Export Working Capital Loans, and International Trade Loans. “The SBJ Act strengthened existing SBA programs helping SMEs in the areas of export financing, export counseling, and technical assistance,” Ginsburg says. For these programs, the SBJ Act:

• Raised the International Trade Loan and Export Working Capital Loan limits to $5 million, up from $2 million, both with 90 percent guarantees.
• Made permanent the SBA Export Express Loan with a 90 percent guarantee for loans up to $350,000 and a 75 percent guarantee for loans greater than $350,000, up to the lending limit of $500,000.
• Provided $90 million in state grants over three years for small business export promotion.
• Increased staff and resources in the SBA’s financing, counseling, and technical assistance areas.

The SBA also partners with the U.S. Department of Commerce and the Export-Import Bank of the United States in a national network of U.S. Export Assistance Centers (USEAC). The USEACs provide a one-stop shop for trade promotion, financing, and export insurance programs.

Uncertainty and lack of familiarity with trade financing are major obstacles to U.S. small business entry into global trade. When asked by The Wall Street Journal why so few U.S. small businesses export, SBA Administrator Karen Mills cited fear as the main reason. “They’re afraid that they don’t understand the complexities of the regulations or they fear that they won’t get paid.”

Ginsburg echoes that assessment. “When I speak with small business owners, I usually ask if any of them have received an e-mail from outside the U.S. inquiring about their products or services. The majority of the audience usually responds affirmatively. When I ask how many of them have actually replied to the inquiry, only a few raise their hands! This is anecdotal evidence that the potential is there but it is not being tapped,” Ginsburg says.

This is why the network of USEACs is so important. Assistance center staff members and commercial bankers say a visit to an export assistance center is often the first time a small business owner learns about trade finance and export assistance programs.

M.G. Shetty, a Senior Vice President of Trade Finance and Sales at the Bank of Texas in Houston, cites a small business that had about $3 million in annual sales from domestic markets only. The business produced a unique product with strong global demand potential. Shetty suggested the business explore export financing and introduced the owner to contacts at the Export-Import Bank in his region.

The small business owner was not aware of the USEAC and Export-Import Bank programs or the services for finding potential buyers in foreign markets. After receiving training and assistance, the small business closed a transaction with a buyer in Singapore for $1.3 million. Afterward, the small business focused all its effort on international markets. In a few years, the business’s sales grew to $16 million, exclusively from international buyers.

The SBA offers information on USEACs and how to find your closest SBA district office. The NEI’s multi-agency Web site offers additional information on exporting.