Tags: Ex-Im | bank | loan | export

If the Ex-Im Bank Fails So Will Small Businesses

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Thursday, 02 Apr 2015 08:16 AM Current | Bio | Archive

It's hard to reconcile why some Republican leaders who are die-hard supporters of free trade would try to block the reauthorization of the Export-Import (Ex-Im) Bank, which directly supports foreign market access for U.S. small businesses.

Considering the urgent need to grow American exports, which immediately creates small business opportunities and good-paying jobs, it mystifies me that Republicans would want to end an institution that provided $20.5 billion in financial support for goods manufactured in the United States and exported to other countries during fiscal 2014.

Ex-Im maintains that since 2009, it has created or sustained 1.3 million American jobs — jobs that otherwise would have been sent to China, South Korea, France or some other competitor nation with its own version of the Ex-Im Bank.

Can you see why it makes no sense to try and end an institution that has aided small business exporters since it was created as part of the New Deal in 1934?

The fight over reauthorization of Ex-Im is bound up in some misconceptions and inaccuracies that have threatened its existence.

The main knock against Ex-Im is that many consider it a form of corporate welfare, since 75 percent of its loans primarily benefit large corporations like Boeing. Yes, that takes place, but a growing part of Ex-Im's portfolio is small and medium-sized businesses, like mine.

As an exporter I know this first-hand since our private banks and financial institutions will not accept export receivables or inventory as collateral for a loan. This makes it impossible for our small businesses to compete. These are some of our best companies run by hard-working entrepreneurs who are willing to take risks to open new foreign markets. In turn, this creates demand for U.S. goods and provides jobs for our people. It is what makes the world go round.

National Small Business Association data show that during the past five years between one-fourth and one-third of U.S. small businesses haven't been able to access adequate financing. And that's among all small businesses; this number skyrockets among small exporters.

The Ex-Im Bank does not compete with private sector lenders. It provides export financing and insurance products that fill gaps in trade financing. They assume credit and country risks that the private sector is unable or unwilling to accept.

The anti-Ex-Im movement has grown so strange that Koch Industries, the Wichita, Kan.-based diversified manufacturing company run by the Koch brothers, is lobbying against the bank's renewal — even though its subsidiaries have benefited from its financing in the past. For example, overseas customers of Georgia Pacific, the Koch-owned paper products company, received loan guarantees from the bank.

These are strange times that we live in!

The Ex-Im Bank is self-funded, making money on interest on loan guarantees it provides on behalf of large and small businesses that manufacture and export American made products. These loans are at market rates and yes, they are repaid.

GE, an Ex-Im supporter, wrote in its newsletter that "The Ex-Im Bank has helped more than 8,000 companies from all industries and of all sizes ship products abroad, and over 20 years has returned about $7 billion to the U.S. Treasury Department. That money lowers the deficit and, in turn, helps taxpayers."

National Small Business Association CEO Todd McCracken, writing in The Wall Street Journal, says the Ex-Im Bank is a critical tool: "Because the bank shoulders some of the risk of international deals, more small businesses are able to export today. There's a larger argument for the bank, as well. There are foreign-export credit agencies around the world that provide substantial support for their country's exporters. Killing the bank is tantamount to unilateral disarmament and will damage our global competitiveness."

That's it in the nutshell. Shut down the Ex-Im Bank and you shut down the heart of America's ability to compete globally — and at the same time, kill small and medium businesses and the jobs they create throughout the U.S.

Is this really a platform that will help Republicans win in 2016? I don't think so.

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NealAsbury
It's hard to reconcile why some Republican leaders who are die-hard supporters of free trade would try to block the reauthorization of the Export-Import (Ex-Im) Bank, which directly supports foreign market access for U.S. small businesses.
Ex-Im, bank, loan, export
670
2015-16-02
Thursday, 02 Apr 2015 08:16 AM
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