The Senate Committee On Banking, Housing, and Urban Affairs recently conducted a hearing regarding the reauthorization of the Export-Import Bank of the United States (Ex-Im Bank). Fred Hochberg, Chairman and President of the Ex-Im Bank, testified that engaging U.S. small businesses in the world market is the Ex-Im Bank's biggest opportunity and biggest challenge. Mr. Hochberg noted that outreach is important because many small businesses are not aware of the services that the Ex-Im Bank offers.
The Ex-Im Bank is the official export credit agency of the United States. Its mission is to assist in financing the export of U.S. manufactured goods and services. The Ex-Im Bank describes its mission as enabling "U.S. companies—large and small—to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy." The Ex-Im Bank fulfills its mission by assuming "credit and country risks that the private sector is unable or unwilling to accept."
In his testimony, Mr. Hochberg stated that small businesses are critical to the U.S. economy and comprise a significant number of net new jobs. The Ex-Im Bank follows the Small Business Administration's definition of a small business concern. A small manufacturing business is defined as having 500 to 1,500 employees, depending on the product manufactured. In fiscal year 2013, the Ex-Im Bank financed a total of $6 billion in small business exports, of which $5.2 billion directly supported American small-business exporters. In fact, the Ex-Im Bank financed a record 3,413 small businesses. This small business financing accounted for nearly 90 percent of Ex-Im Bank's transactions and helped support 205,000 U.S. jobs in 2013. Mr. Hochberg noted that the Ex-Im Bank financed more small businesses in the last five years than the prior eight years combined.
The Ex-Im Bank's products include working capital financing that allows small business exporters to obtain loans from commercial lenders that are guaranteed by the Ex-Im Bank, export credit insurance that limits international risk, and credit to international buyers. The Ex-Im Bank also has implemented new products to assist small businesses as part of its Small Business Special Initiative. Its most popular new product, Express Insurance, is a short-term insurance policy that helps small businesses expand into new foreign markets by providing access to export credit risk insurance against foreign buyer nonpayment.
The reauthorization of the Ex-Im Bank will provide additional financing opportunities to U.S. manufacturers seeking increased access to foreign markets. Moreover, the tools provided on the Ex-Im Bank's website offer additional assistance to small businesses that want to expand their exports.