Global Access for Small Business

Small businesses are critical to economic recovery. They create two out of every three new jobs in the United States, and more than half of employed Americans either work for or own a small business. (Source: U.S. Small Business Administration) Unfortunately, lack of access to credit from commercial banks is limiting the growth potential of many small businesses.

To help mitigate this gap, Ex-Im Bank launched Global Access for Small Business (Global Access) initiative in 2011 to help more U.S. small businesses obtain the financing to export. This top priority contributes to President Obama’s National Export Initiative (NEI) and his goal to double U.S. exports by 2015.

Ex-Im Bank aims to reach $9 billion in annual small-business export financing and add a total of 5,000 new small businesses to its portfolio by 2015. The Bank also aims to approve a cumulative total of $30 billion in small-business transactions by that year.

To reach these benchmarks, Ex-Im Bank has developed new products such as express insurance (see below), which is in high demand. The Bank sponsored two dozen Global Access forums nationwide in FY 2011 with other federal agencies and private-sector partners that were attended by over 3,500 participants. The Bank also created a user-friendly small-business Web portal and sponsored free monthly Webinars for small businesses to learn how to use its trade-finance products.

Ex-Im Bank Small-Business Authorizations

Direct Small-Business Support

Ex-Im Bank is providing export financing to an increasing number of U.S. small businesses, particularly companies that have fewer than 100 employees or traditionally have been underserved, including minority-owned and woman-owned companies.

In FY 2011, Ex-Im Bank authorized an all-time high of $6 billion – a 19.5 percent increase compared to FY 2010 – directly supporting U.S. small businesses as primary exporters. This financing represents nearly 18.4 percent of total Ex-Im authorizations.

The Bank approved 3,247 transactions in FY 2011 that were made available to small-business exporters. These small-business transactions represented 87 percent of the total transactions.

In FY 2011, 672 U.S. small businesses used Ex-Im products for the first time. The Bank authorized amounts under $500,000 for 1,345 small-business transactions.

Indirect Small-Business Support

Ex-Im Bank also supports small businesses indirectly through its financing for larger transactions. Small businesses that serve as suppliers to U.S. exporters benefit indirectly through Ex-Im’s long-term loan and guarantee transactions.

Long-term transactions typically are for $10 million or more and/or have a repayment term in excess of seven years. At the time of authorization, the Bank captures the value provided by small-business suppliers by estimating the small-business participation in the overall long-term transaction.

For FY 2011, Ex-Im Bank estimates that the approximate value of this indirect small-business support was $2.29 billion out of a total estimated export value of $21.46 billion. This represents more than 10 percent of the total estimated export value associated with the Bank’s long-term transactions.

Minority-Owned and Woman-Owned Small-Business Support

In FY 2011, Ex-Im Bank authorized $719 million to support exports by 598 U.S. small and medium-sized businesses known to be minority-owned and woman-owned – up 15 percent from FY 2010. The Bank also authorized $295.2 million in working capital guarantees for these companies – 9 percent of total working capital authorizations and up 16 percent from FY 2010. Although authorizations for minority-owned and woman-owned firms increased, the Bank is focused on expanding outreach to help more of these companies participate in the NEI goal to double U.S. exports by 2015.

Top 10 Country Markets of Ex-Im-Supported Small-Business Exports

FY 2011		FY 2010
Rank	Country Market	Rank	Country Market
1	Mexico	1	Mexico
2	Brazil	2	Canada
3	Panama	3	United Kingdom
4	Oman	4	Australia
5	Argentina	5	Germany
6	Costa Rica	6	Brazil
7	Canada	7	China
8	United Kingdom	8	Japan
9	El Salvador	9	France
10	Indonesia	10	Singapore

Top 10 States in Ex-Im-Supported Small-Business Exports in FY 2011

(in millions)
Rank	State	Small-Business Export Value*
1	California	$1,542.4
2	Texas	1,317.9
3	Florida	993.7
4	New York	868.3
5	Georgia	530.4
6	Massachusetts	375.3
7	Pennsylvania	334.9
8	Indiana	286.9
9	Missouri	245.6
10	Maryland	221.8

*Estimated export value based on Ex-Im Bank disbursements

Small-Business Products

The Ex-Im Bank products most used by U.S. small businesses are export-credit insurance and working capital loan guarantees. Export-credit insurance protects exporters and lenders from the risk of buyer nonpayment for commercial or political reasons and enables exporters to extend credit to international customers. Working capital guarantees cover 90 percent of the outstanding balance of working capital loans to exporters supported by export-related inventory and accounts receivable.

In FY 2011, the Bank approved $7 billion in total export-credit insurance authorizations, of which small-business authorizations totaled $3.3 billion – 47 percent of these authorizations. The small-business use of these products is even more pronounced when measured by the number of policies. The Bank issued 2,649 insurance policies to small-business exporters, which represents nearly 90 percent of the total number of insurance policies in FY 2011.

The Bank authorized a historic high of $3.2 billion in working capital guarantees, of which nearly 67 percent of which supported small businesses. The Bank approved a record number of 522 small-business working capital guarantees in FY 2011.

New Products

At the annual conference in April 2011, Ex-Im Bank launched express insurance – a short-term export-credit insurance product that was primarily developed for companies beginning to export. This policy helps small businesses expand into new foreign markets and add new buyers. It provides payment risk protection and enables the exporter to extend competitive credit terms to foreign buyers. It also helps small businesses obtain lender financing of those receivables through assignment of policy proceeds to the lender.

Another advantage is the improved application process. A streamlined online application provides a policy quote and credit decisions of up to $300,000 within five business days or fewer.

In the months of fiscal year 2011 since it became available, the Bank issued 141 express insurance policies valued at $64.3 million.

The Bank’s supply-chain finance guarantee benefits U.S. exporters and their suppliers through accounts-receivable financing. It is designed to inject liquidity into the marketplace and provide suppliers, particularly small businesses, with access to capital faster and at an affordable cost.

Suppliers improve their cash flow by selling their accounts receivable to a lender to obtain early payment of invoices at a discounted rate. This helps them obtain cash quickly (often at lower rates that reflect the credit of the exporter) and increase liquidity to fulfill new orders. As a result, exporters have the option to extend their payment terms and obtain a working capital benefit without imposing undue financial burdens on their suppliers. Ex-Im Bank provides a 90 percent guarantee of an eligible invoice.

In FY 2011, Ex-Im Bank approved more than $1 billion in two additional supply-chain transactions to support liquidity from Citibank and JPMorgan Chase to suppliers of Caterpillar Inc. and The Boeing Company. The Bank’s first supply-chain transaction, supporting suppliers of CNH America LLC under financing from Citibank, is already operative.

Staff Outreach

Additionally, the Bank’s staff participated in 160 seminars nationwide sponsored by women-business centers, small-business associations, minority-focused chambers of commerce and other organizations.

Ex-Im Bank has regional offices in New York, Miami, Houston, Dallas, Chicago, Newport Beach, San Diego and San Francisco. The 20 regional office staff members are exclusively dedicated to following up on small-business leads and helping small companies begin or expand exporting.

Ex-Im Bank offers seminars for small businesses that traditionally have been underserved in trade finance. These half-day programs provide training in use of U.S. government resources to find foreign buyers and trade-finance tools.

The Bank also worked closely in FY 2011 with the U.S. Department of Commerce and the Office of International Trade of the Small Business Administration on small-business outreach. Bank and DOC staff jointly visited prospective exporters and worked together at international-buyer trade shows.

Increased Lender/ Broker Participation

Ex-Im Bank leverages its resources on behalf of small businesses by working with private-sector lenders, insurance brokers and other financial and trade institutions. By fiscal year’s end, 113 lenders were enrolled in Ex-Im’s Working Capital Guarantee Program and 105 of these lenders had received delegated authority to provide Ex-Im’s guarantee for working capital loans without prior approval from the Bank. A total of 12 new lenders were added to the Bank’s lenders list, eight of which received delegated authority in FY 2011.

An additional 20 brokers serving small businesses were added to the Bank’s roster of 80 active brokers providing Ex-Im’s insurance products. The top five small-business brokers accounted for over $800 million in small-business authorizations.

Technology Improvements

Technology is critical to reaching small businesses and providing them with timely financing products and service. In FY 2011, Ex-Im Bank completed the full transaction life-cycle support for reinsurance and supply-chain products as well as the design and implementation of the new express insurance product.

The Bank’s online application and transaction management system – Ex-Im Online – was also enhanced to enable customers to upload supplier participants and invoicing information, support multiple supply contracts for an exporter, support medium-term co-financing forms, enhanced exposure calculation and monitoring, and provide medium-term processing to support foreign-currency special coverage. Key metric indicators and reporting were developed to monitor cycle time and adjust resources to meet the service level agreement for these transactions.

Ex-Im Online provides exporters, particularly small businesses, with the benefits of electronic application submission, processing and insurance-policy management. In FY 2011, 85 percent of Ex-Im Bank’s small-business transactions were submitted through Ex-Im Online.

Information technology tools were made available to enable customers to provide feedback on the Web site, participate in meetings and training (Webinar) sessions, register for the annual conference, interact with regional offices and perform other functions. Ex-Im Bank continues to expand its Web-based subscription service, social media services (i.e. Twitter, LinkedIn) to provide customers with up-to-date Bank news.

Ex-Im Bank participates in the government-wide "Export Gateway" initiative that integrates the content and functions of the Web sites of business-focused federal agencies (www.export.gov).

Ex-Im Bank continued to publish additional data sets (15 new data sets in FY2011) on its Web site that had not previously been available in an open format with a mechanism for the public to submit feedback. Transaction data is updated monthly.

Express Insurance Helps High-Tech Manufacturer Increase Exports

Photo courtesy of ServerLIFT Corp.

ServerLIFT is a high-tech small-business manufacturer of lifts for transporting and sustaining data-center servers. It was founded by Ray Zuckerman in 2002 in response to a growing demand for a safe and efficient way for staff to handle servers and other IT equipment in data centers. This company had maintained its manufacturing facilities in China and recently moved its operations back to the United States, resulting in doubling the number of its U.S. employees.

In June 2011, ServerLIFT received a $250,000 Ex-Im Bank express insurance policy for approved buyers in Ireland and Turkey. ServerLIFT was also 1,000th small-business customer to join the list of first-time users of the Bank's export finance products as part of its Global Access for Small Business outreach.

Ex-Im’s express insurance was developed to help small businesses expand into new markets and add new buyers. It features a streamlined online application and provides a policy quote and foreign-buyer credit indications up to $300,000 within five business days or fewer.

"The Bank's support gives us the credibility that we need to pursue foreign buyers," said Ray Zuckerman, CEO of ServerLIFT. "Extending credit makes us more attractive to our customers and allows us to sell to larger companies."

California Company's First International Deal Due to Ex-Im Bank Guarantee

Photo courtesy of Ceilings Plus Inc.

Ceilings Plus Inc. is a small, woman-owned business that manufactures high-quality ceiling and wall panels. The company began exporting about five years ago, and more than 50 percent of its sales are now from exports. 

The company first came to the attention of Ex-Im Bank in 2007 via a lender, Bank of the West, regarding its pre-export working capital needs. Ceilings Plus had won $18 million contract for the expansion project of the Doha International Airport in Qatar. Although the company was successful in the United States, this was its first international deal, and a $2.2 million performance bond and collateral were required.

Ex-Im Bank's guarantee of a working capital loan enabled Ceilings Plus to access funds that would have otherwise been tied-up in the performance bond. The company subsequently was awarded an $11 million contract for Phase II of the project, for which Ex-Im’s guarantee was used again to support financing for issuance of a performance bond.

The Bank’s working capital guarantee has been instrumental. Due to its increased foreign sales growth, Ceilings Plus has increased its workforce from 86 employees in April 2008 to 150 employees in April 2011.

"Ex-Im Bank has engaged in steady collaboration with our company and our local bank to provide the financial support we needed. This helped give us the confidence to venture into the international world. Ceilings Plus sales have more than doubled and have increased our employment with the help of Ex-Im," said Ceilings Plus President Nancy Mercolino.