Hearing of the Senate Small Business & Entrepreneurship Committee - Opening Statement of Sen. Rubio, Hearing on "Reauthorization of the SBA's International Trade Programs."
Hearing
"I want to thank you all for being here and extend a warm welcome to our witnesses.
"Today's hearing, titled "Reauthorization of the SBA's International Trade Programs' is the Committee's second in a series focused on reauthorization of the Small Business Act.
"This reauthorization process is intended to ensure that the SBA programs are operating efficiently and effectively, while meeting the needs of the modern entrepreneur.
"The hearing today will build off of last week's capital access reauthorization hearing in many ways.
"While our first hearing discussed the SBA's 7(a) guarantee lending program at large, this week we will dive into the export specific loan programs, a division of the 7(a) program, offered though the SBA's Office of International Trade.
"Additionally, our hearing today will examine the State Trade Expansion Program, commonly referred to as STEP.
"Together, the export loan programs and STEP support the SBA Office of International Trade's mission of increasing the number of small businesses that export and the total volume exported.
"Currently, however, despite boasting a remarkable 30.2 million small businesses in the United States, the SBA's Office of Advocacy reports that only 287,835 business export.
"That means less than 1 percent of small firms are exporting.
"The SBA also reports that three-fourths of the world's purchasing power and 96 percent of the world's consumers reside outside of the United States.
"This leaves vast potential for small business growth through expansion into international markets.
"Additionally, exporting can serve as major driver for a states economy.
"Exporting is particularly key within Florida.
"In 2018, Florida was the 8th largest exporter in the United States.
"More than 232,000 jobs in Florida are supported by international trade and 56,664 small businesses are operating as exporters.
"Those small and medium sized firms generated roughly 59 percent of Florida's total export value, 26 percent higher than the national average.
"So why don't more small business export?
"The most recent Small Business Exporting Survey, prepared by the National Small Business Association and the Small Business Exporters Association, reports high barriers to exporting.
"Small Businesses report a lack exporting education, are concerned that they won't get paid by foreign buyers, and fear regulatory barriers and complexity.
"The SBA Office of International Trade seeks to provide resources to small businesses to minimize these barriers.
"The State Trade Expansion Program, or STEP, provides matching grants to U.S. states and territories to help more small businesses begin exporting or expand the volume of goods and services they already export, including into additional markets.
"STEP grant recipients offer businesses a number of exporting resources, including participation in foreign trade missions and trade shows, translation services for websites, and export specific business consulting, to name a few.
"The impact that STEP has had on small businesses has been truly remarkable. In fiscal year 2016, STEP aided more than 7,000 small businesses and returned approximately $31 for every one federal dollar invested.
"In addition to STEP, the SBA Office of International trade also administers three export specific loan programs.
"The three lending programs we will discuss today include: the Export Express loan program, the Export Working Capital Program, and the International Trade loan program.
"All three export loan programs are offered through the SBA's flagship 7(a) loan program.
"The SBA's export-specific loan programs were reported to have collectively only provided small businesses with a total of $734.6 million in loans.
"We know that loans are also made to exporters through the general 7(a) loan guarantee program as opposed to the export-specific loan products, due to a lack of clarity from SBA on requirements and eligibility, according to many SBA lenders.
"Many of the states with the highest number of SBA export-specific loans are represented by Members of this Committee.
"Last fiscal year, Florida, New Jersey, Illinois, Washington, and Missouri were listed among the top ten export loan markets.
"Despite making up half of the top loan markets, a total of only 144 export specific loans were made in these 5 states.
"In fact, only 476 export specific loans were offered nation-wide last fiscal year.
"The total number of export specific loans not only concerns me in terms of their limited small business impact, but also with regard to the programs overall efficiency levels.
"Currently, SBA employs over 20 GS-15 level individuals to administer the export-specific loan programs, making the administrative costs of the program remarkably high.
"In addition to the cost of salaries and expenses for these 20-plus employees, taxpayers also support office space and travel expenditures, again, to support less than 500 export-specific loans in a single year.
"Today's hearing will give us the important opportunity to assess the SBA international trade programs, and examine potential improvements from both committee members and witnesses."
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