Tuesday, October 22, 2013
Analyst in Public Finance
According to Census data, approximately 1% of small businesses in the United States currently export. With roughly three-quarters of world purchasing power and almost 95% of world consumers living outside of U.S. borders, more attention is being paid to the potential of small business export promotion programs to grow small businesses and contribute to the national economic recovery. In addition, some Members of Congress believe that the contributions of small businesses to commercial innovation and economic growth could be enhanced through greater access to growing international markets.
Consistent with these policy goals, the Small Business Administration (SBA) provides export promotion and financing services to small businesses through its loan guarantee programs, management and training programs, and other initiatives. SBA’s Office of International Trade (OIT) coordinates these activities as it assists with four stages of export promotion: (1) identifying small businesses interested in export promotion; (2) preparing small businesses to export; (3) connecting small businesses to export opportunities; and (4) supporting small businesses once they find export opportunities.
The Small Business Jobs Act of 2010 (P.L. 111-240) elevated trade within SBA by establishing an Assistant Administrator to lead OIT and report directly to the SBA Administrator. The act also authorized SBA to establish a three-year State Trade and Export Promotion (STEP) Pilot Grant Initiative. Under the STEP initiative, which was appropriated $30 million both in FY2011 and FY2012, SBA awarded grants to states with the goal of assisting eligible “small business concerns” with exporting. The STEP program’s authorization has expired. In the 113th Congress, H.R. 2333, the Next STEP Act of 2013, would provide for the permanent extension of the STEP program. On July 17, 2013, the Senate passed a Financial Services appropriations bill (S. 1371) that recommended $20 million in STEP funding for FY2014.
SBA’s export-related loans amounted to approximately $925 million (comprising approximately 4.0% of SBA’s annual loan portfolio) in FY2011 and FY2012. Although SBA has three loan programs that are specifically targeted toward exporters, many of SBA’s broader loan programs support export-related activities. Surveys indicate that relatively few clients of SBA’s management and training programs request trade-related counseling, and some choose to receive this information from other federal programs (such as those provided by the Department of Commerce).
This report begins with the history, role, and scope of SBA’s export promotion activities, and the creation of OIT. Next, quantitative data from SBA and qualitative data from other sources are used to provide performance analysis of SBA’s international programs.
This report concludes with a presentation of three issues for consideration during an era where concerns of fiscal responsibility and economic recovery are high priorities for many policymakers. First, are there market barriers impeding smaller firms from exporting? Second, is there a compelling interest for the government to promote exports in the name of national “competitiveness?” Third, are SBA’s export-promotion policies duplicative of other federal programs? In the 113th Congress, several bills have been introduced to improve efficiencies among small business export promotion programs (e.g., H.R. 1909, H.R. 1926, H.R. 1916, S. 1179).
Date of Report: September 24, 2013
Number of Pages: 24
Order Number: R43155
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