I've taken several weeks to analyze the implications of EXIM's Chairman's Quarterly Newsletter, cited below. On the surface, it "feels" positive -- at least in terms of its artful, bulletized roster of achievements.
But let's not forget that that EX-IM exists largely for the purpose of assisting smaller, entrepreneurial enterprises in getting trade financing, credit enhancements, guaranties, and project financing to make it easier for them to enter the global marketplace. This should, in theory, create export, joint venture and project development opportunities for US businesses throughout the world, for the benefit of the US small business sector, the other nations interacting with these businesses, and the US economy-at-large in terms of the balance of trade, the balance of payments and employment. Noble objectives all.
Yet, very large companies, like Caterpillar are the recipients of the greatest percentage, by far of EX-IM funds and credit enhancements. It would seem to be as if EX-IM simply helps big winners continue to win. In other cases, many of the loans and guaranties issued to "small businesses," are actually issued to separately incorporated subsidiaries or affiliates of much larger businesses - like Halliburton Corp, or even ENRON Corp. (in days past) for example. It is not an easy process for a small business to navigate its way through the mountain of compliance and reporting paperwork required by EX-IM. It is only natural then, for large companies to use their resources and expertise to use certain small businesses (particularly those with some minority or special status) as proxies for them to obtain this inexpensive financing.
Too many "small businesses" truly qualify as such only superficially, with most of the recipients of funding and benefits being extensions of much larger businesses with greater resources and lobbying power. While this does benefit the Balance of Trade and Balance of Payments for the United States, it hardly promotes new jobs creation in the US. Sadly, too much of the largesse of the EX-IM Bank does not actually 'trickle down' to the independent US small businesses which would generate the greatest returns in terms of employment and taxable profits... nor does this benefit the smaller businesses internationally which might gain a market advantage or edge by either importing a US product, or by partnering with a peer-sized US company.
Truly independent US-based small businesses need an easier, less-complicated route to EX-IM's resources and programs; at the same time, I believe that EX-IM might do more to qualify those smaller businesses which are not not looking for less-expensive financing -- but those that would, of necessity, use a limited infusion of capital most prudently and efficiently.
The Quarterly Newsletter follows:
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The following information is from the Export-Import Bank of the United States (Ex-Im Bank). It is being sent to subscribers to the Bank's email list for those interested in learning about Ex-Im Bank's activities.
Export-Import Bank of the United States
Office of Communications
CHAIRMAN'S QUARTERLY NEWSLETTER
October 18, 2011
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October 18, 2011
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Ex-Im Reports Record-Breaking Year
Ex-Im Approves Over $32 billion in financing for FY2011; $6.0 billion in financing to small business
For fiscal year 2011, Ex-Im Bank approved over $32 billion in financing, an all-time record for the Bank and up 110% from 2008. These financings supported approximately 300,000 U.S. jobs and included more than 3,000 small business transactions - up nearly 20%. Fiscal year 2011 marks the third consecutive record-breaking year, with significant growth seen in industries such as aircraft, renewable energy, and infrastructure as well as key markets including Colombia, India, Turkey, and Sub-Saharan Africa.Ex-Im Bank is steadfast in achieving the goals of the President's National Export Initiative (NEI) in doubling exports by 2015. In addition, significant progress was made in accomplishing Ex-Im Bank's goals to add 5,000 new small businesses to the Ex-Im Bank portfolio, double the small business volume to $9 billion, and approve $30 billion in total small business transactions.
- Add a total of 5,000 new small businesses to the Ex-Im Bank portfolio1500 as of 9/30/115000
- Double its annual small business volume to $9 billion$6 billion as of 9/30/11$9 billion
- Approve $30 billion in total small business transactions$15.3 billion as of 9/30/11$30 billion
Preliminary FY'11 Highlights Include:
- 3,750 transactions
- 1,019 companies new businesses to Ex-Im portfolio
- $6.0 billion in small business export financing, an all-time record
- $719 million in minority- and woman- owned export financing
- $720 million in renewable financing, up from $30 million in 2008
- Over $1.3 billion in Sub Saharan Africa - first time we have passed the billion dollar mark in Africa
- $2.9 billion increase to India, a direct result of the President's efforts to build a strategic alliance
Ex-Im Bank Issues Over 100 Express Insurance Policies
Since its launch at Ex-Im Bank's 2011 Annual Conference, express insurance has proved to be a much-needed short-term export insurance product, which is available only to small businesses. One hundred and twelve exporters purchased an express insurance policy in fiscal year 2011 leading to over $50 million in authorizations. Thirty-two of our insurance broker partners distributed more than 90% of the express insurance policies, with Trade Acceptance Group of Minnesota and Global Business Solutions of North Carolina tied for the most express policies sold.SEE THE ENTIRE PUBLICATION OF THIS QUARTERLY REPORT IN A NEW WINDOW AT http://www.exim.gov/newsletter/volume6/newsletter_October18.cfm
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It would also seem to make sense for the US Small Business Administration (SBA) to work in closer coordination and cooperation with EX-IM to better serve the purposes of these little 'employment and innovation engines' than what is being done at present.
Douglas E Castle
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