In a faltering U.S. economy many small-business owners are doing what small-business does best: improvising. Increasingly small businesses are looking to foreign markets as a way to grow business and sell their services. But the Export-Import (Ex-Im) Bank, which provides loans and insurance to support U.S. exports, needs to do a better job in helping small firms, according to the Government Accountability Office.

Ex-Im’s Track Record with Small Business Exporters
Ex-Im provides loans, guarantees and insurance to support U.S. exports, both large and small scale operations. In 1985 Congress required Ex-Im to make available for fiscal 1986 and thereafter at least 10 percent of its aggregate loan, guarantee, and insurance authority for financing exports by small businesses. In 2002, Congress increased the percentage to 20 percent.

Congress also requires Ex-Im to report annually on the number of its transactions that directly benefit small business and to estimate the number of small businesses Ex-Im indirectly supports as suppliers to companies receiving Ex-Im financing.

In 2006 Congress required that Ex-Im develop performance standards for the bank's assistance and outreach to the small business community, particularly for small disadvantaged and minority owned businesses.

By 2007, Ex-Im had already authorized more than $12 billion in loans, guarantees, and insurance. Of this amount, $3.4 billion – about 27 percent -- directly supported U.S. small businesses. While the data demonstrates an increase and commitment to small-business exporters Ex-Im continues to fall short on ensuring that disadvantaged and minority businesses are being served.

GAO Findings
The GAO released a report (last week recommending that Ex-Im:

Establish better performance standards;

Improve its measurable targets and time frames; and

Take steps to establish a measure for financing small businesses owned by disadvantaged individuals.

The study did find that overall the bank does have some performance standards in place, but it is in the very early stages of measuring their effectiveness. As the report points out "11 out of 27 measures lack measurable targets and time frames to fully evaluate progress toward meeting the performance standards."

Unfortunately for the small-business community none of the standards directly address the function calling for increased outreach to businesses employing fewer than 100 employees.

Additionally, Ex-Im also has no measurements for monitoring progress toward its performance standard for financing small businesses owned by socially and economically disadvantaged individuals.

Ex-IM’s Response to the GAO Findings
Overall the bank agreed with the GAO's suggestions. However, Ex-Im officials did provide some pushback on the criticism of not providing adequate measures for financing disadvantages and minority owned small businesses.

Ex-Im officials said that developing these measures is difficult given that they cannot require small businesses to report this type of ownership status information on their applications and available data sources are not adequately reliable for this use.

To view the full GAO report Click Here.
To view NSBA’s Issue Brief on International Trade Click Here.