[Senate Hearing 117-732]
[From the U.S. Government Publishing Office]
S. Hrg. 117-732
OVERSIGHT OF SBA'S STATE TRADE
EXPANSION PROGRAM
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HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 21, 2022
__________
Printed for the use of the Committee on Small Business and
Entrepreneurship
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
50-574 WASHINGTON : 2023
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SEVENTEENTH CONGRESS
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BENJAMIN L. CARDIN, Maryland, Chairman
RAND PAUL, Kentucky, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina
CORY A. BOOKER, New Jersey JONI ERNST, Iowa
CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma
MAZIE HIRONO, Hawaii TODD YOUNG, Indiana
TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana
JACKY ROSEN, Nevada JOSH HAWLEY, Missouri
JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas
Sean Moore, Democratic Staff Director
William Henderson, Republican Staff Director
C O N T E N T S
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Witness Prepared Statements
Panel 1
Page
Mr. Gabriel Esparza, Associate Administrator, Office of
International Trade, U.S. Small Business Administration,
Washington, D.C................................................ 3
Panel 2
Mr. Shaun Akhavan, Director of Exports, Allied International,
LLC, Glen Burnie, MD........................................... 18
Ms. Grace Preston, International Sales Manager, Geophysical
Survey Systems Inc., Nashua, NH................................ 22
OVERSIGHT OF SBA'S STATE TRADE EXPANSION PROGRAM
WEDNESDAY, SEPTEMBER 21, 2022
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 2:30 p.m., in
Room 428A, Russell Senate Office Building, Hon. Ben Cardin,
Chairman of the Committee, presiding.
Present: Senators Cardin, Shaheen, Hirono, Rosen,
Hickenlooper, Ernst, Young, Hawley, and Marshall.
OPENING STATEMENT OF CHAIRMAN CARDIN
Chairman Cardin. The Small Business and Entrepreneurship
Committee will come to order. Our subject for today's hearing
is the oversight of the SBA's State Trade Expansion Program,
the STEP program.
Let me just point out that there are two votes currently
going on on the floor of the United States Senate, so I expect
members will be coming in and out. We are going to get started,
so I just welcome everyone to today's hearing.
Today's Senate Small Business Committee will conduct
oversight on the Small Business Administration's State Trade
Expansion Program, also known as STEP. Though not as well-known
as other products and services operated by the SBA, STEP is a
vital part of the Federal Government's toolkit for supporting
small businesses.
As we continue to recover from the COVID-19 pandemic,
international trade has the potential to be a major catalyst
for growth for American small businesses, but they are going to
need some help. Currently less than 1 percent of America's
small businesses export their products and services. This is a
missed opportunity. Ninety-five percent of the global consumers
live outside the United States. This is a major market that
American small businesses have not yet engaged with their
fullest capacity.
Small businesses typically work with razor-thin profit
margins and fewer staff. They cannot always afford trips abroad
to connect with potential trading partners or pay for the
professional consulting on how to navigate the rules that
govern international trade. Some companies may not even know
how to translate their website into another language.
These barriers are why Congress created STEP in 2010. I
want to thank Senator Shaheen for her foresight and leadership
on this issue at that time. She led the effort to make STEP
permanent when it was a pilot program, as well as the
reauthorization effort in 2016. She continues to be a fierce
advocate on behalf of small businesses in the international
export market.
STEP provides grants to state economic development agencies
which then help small businesses attend international trade
shows and connect with customers in foreign markets. The grants
also fund consulting and training to help small businesses
navigate the complex rules of international trade, many of
which are new concepts to small business owners, like tariffs.
More than a decade after its creation, the data confirms
that STEP is one of the best investments Congress can make in
the American economy. A 2020 performance report of STEP found
that for every dollar Congress invested in the program, it
returns $42 in international sales to small businesses. That is
quite a return.
Now is the time for Congress to double down on the success
of STEP by reauthorizing the program and providing funds to
meet the demand for all small businesses. Last year, states
requested a total of $39 million in funding through STEP
program, but Congress only funded the program at $20 million.
As a result, my home state of Maryland, which requested
$900,000, only received $600,000 in grants.
Put another way, we currently see a 42-to-1 return on
investments in STEP. This past year, STEP only had funding to
grant half of the total amount that was requested by state
governments. Our inability, our failure to fund the second half
of these requests cost small businesses an estimated $1 billion
in sales in the export market. Again, this is a missed
opportunity.
Helping our small businesses succeed in the international
market is vital to our nation's success on the world stage.
Other countries invest heavily in expanding their small
businesses to new international markets. By failing to invest
in the export capacity of American small businesses, we are
losing ground to foreign competitors.
So I am looking forward to an informative discussion with
our witnesses today about why this program is worth investing
in and what we can do to make it even better. I am especially
interested in hearing from Shaun Akhavan, who is the Director
of Exports at Allied International, a family-owned food
distribution company based in Glen Burnie. In 2016, Allied
International used a STEP grant to attend trade shows in
France, Germany, and Dubai. Prior to receiving the grants,
exports were a limited portion of the company's revenues, but
today it is a major growth area for the company that has
allowed them to increase the size of their workforce.
I am also looking forward to hearing from Grace Preston,
who was named Exporter of the Year for New England by the SBA
in 2019. Grace leads international sales for Geophysical Survey
Systems in Nashua, New Hampshire. The company has taken
advantage of STEP, which has produced great results.
Congress has an opportunity to help other small businesses
mirror the growth and job creation of Allied International
through exports. We cannot let this opportunity pass us by.
I want to thank each of our witnesses for joining us today
so we can learn more about the program, and I look forward to
hearing your testimonies.
I just really want to point out that in cooperation with
the Ranking Member, he has indicated that we can proceed and we
will do that. There are conflicts in schedules but he asked me
to continue the hearing.
And we will now go directly to our first witness. We have
two panels today. We are going to hear first from Mr. Gabriel
Esparza, who is the Associate Administrator of the Office of
International Trade, U.S. Small Business Administration. I must
tell you I just had a chance to have lunch with Administrator
Guzman. She says very nice things about you, so let us see if
you can live up to her expectations. I would be glad to hear
from you.
STATEMENT OF GABRIEL ESPARZA, ASSOCIATE ADMINISTRATOR, OFFICE
OF INTERNATIONAL TRADE, U.S. SMALL BUSINESS ADMINISTRATION,
WASHINGTON, D.C.
Mr. Esparza. Thank you, Chairman Cardin, Ranking Member
Paul, and distinguished members of the Committee. Thank you for
honoring me with the invitation to come before you today to
discuss the work of the Office of International Trade at the
U.S. Small Business Administration.
For America's small businesses, exporting is an engine for
growth that allows our firms to reach new customers in an
increasingly interconnected global marketplace. Data shows that
small businesses that export are more resilient, expand faster,
and create higher-paying jobs for Americans. Raising awareness
of the availability of trade assistance through the SBA
requires shifting our frame of reference for what an export
looks like today. The advent of digital tools, e-commerce
engines, and maturing payment networks has reduced barriers to
entry for small businesses to export both products and
services.
At the SBA, Administrator Guzman has prioritized leveraging
these digital technologies to create a whole new generation of
exporters. During the pandemic, e-commerce increased in the
United States and small businesses adopted digital strategies
to survive and grow their revenues, often finding customers all
over the world. We are driving transformational change so that
the SBA can help these accidental exporters become intentional
exporters by expanding and growing their businesses to new
markets.
I am proud to bring my lived experience working around the
globe to SBA's mission to help small businesses grow
internationally. Prior to joining the Administration, I helped
lead a startup small business that built a modern 911 emergency
technology platform. Our company launched in the U.S. and
expanded around the world. Prior to that I spent 13 years at
American Express, working with small businesses, and eventually
leading global business development for their Commercial
Payments Division.
Over the course of my 26-year career I have lived, studied,
and worked around the globe, now almost 70 countries in total,
while at the same time being deeply intertwined in the small
business arena. In that connection, I have seen the power of
American entrepreneurship on a global scale, and I work each
day at SBA to ensure that our small businesses can find new
customers to grow and compete internationally.
One of our office's primary responsibilities is providing
education and training to small businesses that are interested
in exporting. We help businesses prepare for navigating the
complexities of international sales including customs, trade
credit insurance, and foreign exchange. Our efforts are
supported by a range of partners throughout the SBA, across the
Federal Government, and with certain public-private
enterprises.
After a business has established a solid idea, product, or
service, often including a track record of successful domestic
sales, they need access to capital to fund and grow their
overseas expansion. SBA's lending portfolio provides guarantees
on loans and credit lines originated through the private
banking industry. The Office of International Trade is
authorized to provide higher guarantees on these facilities due
to the unique circumstances faced by exporters, namely
increased buyer work, country risk, and currency risk.
The SBA's Office of International Trade also focuses on
providing grants to small businesses in the form of export
expense reimbursement through the State Trade Expansion
Program, or STEP. This year we are proud to be celebrating the
10th anniversary of STEP, which, over the last decade, has
awarded over $200 million to all 50 states and 6 territories.
The STEP program has supported 12,000 small businesses and
generated approximately $5.5 billion in export sales.
Demand for STEP resources from the states is strong. This
year, STEP applications were the highest ever, both in terms of
states and territories applying as well as the total dollars
requested. In 2022, we will have a record 48 states and 4
territories participating in the program. Our partnership with
the state as well as with external advocacy groups like the
State International Development Organization, or SIDO, is
critical to the efficiency, relevancy, and impact of the
program.
The last piece of the puzzle for most small businesses as
they seek international opportunities is access to foreign
markets. SBA is deeply involved in the interagency trade
apparatus of the Federal Government. It is there that we
advocate for small businesses for all matters related to trade
policy and trade agreements, bringing to life the real life
experiences of small business owners that we meet every day.
SBA is committed to ensuring that the core offerings of our
International Trade Office, education, capital, and market
access are available to the growing universe of small business
exporters. Across the agency, Administrator Guzman has tasked
us with developing more customer-centric approaches to our work
that meets our small business customers where they are. That is
why the SBA is focused on increasing awareness for trade by
connecting to a broader audience of small businesses who are
currently exporting or could potentially be exporting.
I am humbled by the opportunity to serve at the SBA, and I
am excited about the future of our nation's small businesses to
export American-made products to customers throughout the
world. I appreciate the invitation to appear before you today,
and I look forward to your questions.
[The prepared statement of Mr. Esparza follows:]
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Chairman Cardin. Mr. Esparza, first of all thank you very
much for your service. You bring 25 years of experience to this
task, and you have seen it from both sides, working on behalf
of the City of Los Angeles as well as the private sector with
American Express. So I think you bring unique perspectives
here.
We know that export business is challenging for any small
business that does not have the staff capacity to understand
the intricacies of international trade to make the connections,
to deal with the foreign regulations, to deal with export rules
here in the United States. But it is particularly challenging
in traditionally underserved communities.
Do you have any recommendations as to how the STEP program
can be better tailored to deal with small businesses located in
traditionally underserved communities?
Mr. Esparza. Thank you, Mr. Chairman. It is actually an
explicit part of the Notice of Funds Opportunity every year
that we gather applications from the states that one of the
criteria is, in past performance, how much has been done to
provide STEP grants and reimbursements to exactly the small
businesses that you are talking about, those from underserved
communities generally, rural communities, veteran small
businesses, women small businesses.
So it is an explicit part of the application that a track
record of past performance on providing reimbursements to these
underserved communities helps in a successful application. That
is number one.
Number two is our ability to market the program, to get the
word out, and in partnership with the states it is fundamental
to being able to connect with all potential applicants. And so
Administrator Guzman has tasked all of us across the agency not
only to be as customer-centric as possible in all the work that
we do but to have an equity lens that dictates we are going to
find small businesses, and those specifically from underserved
communities, to target them for programs like STEP.
Chairman Cardin. I thank you for that. That is certainly
extremely encouraging. I would urge you to make available to us
and to make available in your public disclosures the progress
you are making. We know the baseline is going to be pretty low
in this area, so we do not expect miracles overnight. But it
would be good to see the demographics of the businesses that
you serve so that we have a better understanding of how well we
are meeting our goal of serving all small businesses in an
opportunity for international trade.
So we would appreciate if you would get that information to
us in a granular way so we can help you in achieving the
objectives that you are trying to achieve.
Mr. Esparza. Of course.
Chairman Cardin. We have also heard that there are
administrative challenges in dealing with the STEP grant. Can
you just share with us whether you have dealt with that concern
by grantees and what efforts you are making to try to make sure
the process is as easy to administer as possible for those that
are participating in the program?
Mr. Esparza. Thank you, Mr. Chairman. I have heard that
feedback, and I find it particularly important in my
conversations with states and the state directors managing the
STEP program that indeed there are occasions in which they have
found challenges with both the application process as well as
the reporting requirements.
I acknowledge that feedback, I am listening to it, and, in
fact, I have tasked my team and our office to look into those
matters. And what we ask for is some version of what are we
asking the states for in terms of data, how are we asking for
it, what platforms, how frequently are we asking for it, and
then when we do get it, what do we do with it?
And so I have asked the team to look into these matters,
and where we can find opportunities to improve our processes we
will absolutely do so. I find that any business transformation
process that we can endeavor to improve the efficiency and
efficacy of the program we will continue to make every effort
to do so.
Chairman Cardin. I have met with many small business owners
that tell me it takes multiple years before you can develop the
type of connections in the international arena to be able to
establish a viable export business. Obviously, to be able to
make that networking connection at a trade mission is a
critical first step. But it does not always end with the
success. It takes more work than just one visit to a trade
mission.
Can you just elaborate a little bit on that as to the time
needed for small businesses to be able to mature in export
markets?
Mr. Esparza. Thank you, Mr. Chairman. Yeah, not only have I
heard that directly from small businesses that are using the
STEP program, for example, but in my own experience working in
small business. I know that international sales, by definition,
take a long time. And so part of the mandate of the Office of
International Trade is to make sure that all components of that
journey are something that we can touch and assist small
businesses on.
It starts with education, training, consultation on just
how to navigate international sales. Secondarily, we provide
access to capital to make sure that the financing journey of
finding international sales, working capital in particular,
access to working capital, is critical. And then third, that
access to foreign markets is an important component, so that we
are driving small businesses to markets where they are most
able to find good opportunities.
And it is along that journey that we consult and work with
small businesses across the country, in order to help
accelerate as many of these international sales cycles as
possible.
Chairman Cardin. Thank you. Senator Marshall.
Senator Marshall. Thank you, Chairman. Administrator,
welcome. My staff gets tired of me saying this, but if you
cannot measure it, you cannot manage it. How do you measure
success? What type of metrics are you looking at?
Mr. Esparza. For the STEP program in particular, Senator?
Senator Marshall. I think if you want to expand it to your
entire, everything you oversee, that is fine. I am open-minded
here.
Mr. Esparza. For the STEP program and for the bulk of what
we do in the Office of International Trade, Senator, we start
with, first and foremost, how much and how many export sales
are we driving out of our programs. Secondarily is how many
jobs are we sustaining or creating. And then collectively
across the work that we do is what is the return on investment.
The Chairman mentioned the 43-to-1 return on investment for our
STEP program. We find that to be a perfect example in support
of how viable and important these programs are.
Those are the primary measures. We have some secondary
measures in terms of----
Senator Marshall. What are you using for like a baseline
then, like the last 5, 10 years, and what do your numbers look
like at this point for 2022?
Mr. Esparza. So we are always looking year over year, but
we are starting to see, of course, the trend analysis. At least
for the STEP program we have 10 years of data now.
Of course, Senator, you will appreciate that the last few
years, during the pandemic, it has been challenging. The trade
shows and trade missions that the Chairman mentioned were
something that we were simply not able to do.
Senator Marshall. Right. So where are we today compared to
pre-COVID, without those other years, as far as the baseline?
Mr. Esparza. Yeah. We are still coming out, Senator, of
some of the implications of the pandemic, so we are still in
that trough and starting to turn the cycle in terms of being
able to----
Senator Marshall. Are any industries hurting more, any
sectors, than the other ones as you see us coming out of it?
Mr. Esparza. That is a good question. I do not know if I
can put my finger on one particular industry per se. What I
will tell you, though, is that what we did find, and I
mentioned it in my opening remarks, is that there were so many
small businesses, in fact 80 percent of the nation's small
businesses are sole proprietors, single individuals.
And as a result of their work in just being resilient and
finding opportunities to have a side hustle or whatever it
might be for them to continue to compete during the pandemic is
they would create a website, they would have an e-commerce
engine, and they would start to get international orders. Lo
and behold, they did not expect that. The Administrator has
deemed these accidental exports. Our work is to try to be able
to make some of those accidental exporters intentional
exporters. So wherever they are in their journey, we are
providing these tools to help them on that journey.
Senator Marshall. Great. I want to talk about access to
capital for a second. Certainly as I go out and talk to
businesses their biggest concerns and challenges right now are
input costs--inflation, supply disruption--and then just not
getting people to come back to work. You know, there is this
low labor participation rate still going on out there. Two or
three million Americans are still not back to work where we
thought they would be if we would go back to pre-COVID labor
participation rate.
But access to capital certainly is a big, big challenge,
especially for small businesses, and I would think even so if
you are trying to get into this international trade. What
advice would you give a young, upstart business that wants to
get into international trade? What type of opportunities are
there for access to capital?
Mr. Esparza. Well, we have, at the Office of International
Trade, Senator, over 100 lending partners. These are primarily
regional banks and community banks. We have a few larger banks
in the mix, but these are very local banks. And these are part
of our partnership with the private banking industry. This is
not us. This is through the private banking industry, where
they are ready, willing, and able to lend, often with just
conventional loans. It does not have to be with an SBA
guarantee.
But where a particular small business is risky, or in the
specific case of exporting small businesses, because of the
unique dynamics with international trade, if that risk merits
an SBA guarantee then the private banking industry will work
with us to make sure that those apply.
Senator Marshall. Thank you. You used the term ``banks are
ready, willing, and able,'' but Mr. Chairman, I would be
curious how your state is doing, but my community banks do not
seem very willing, ready, or able to do this. Most banks throw
up their hands and say, ``We do not want to do these SBA
loans.'' Are you having any challenges in your home?
Chairman Cardin. I think we have a good demographic banking
community for SBA loans. International trade is a different
story. It is not as easy in international trade. Yeah, that is
much more challenging for community banks and regional banks,
and I am somewhat disappointed that you do not have more larger
banks that are interested because they engage more
internationally than some of our regional banks.
But I think your point is well taken. I will give you more
time.
Senator Marshall. Thank you. I am happy. I appreciate the
time. I yield back.
Chairman Cardin. Senator Hirono.
Senator Hirono. Thank you, Mr. Chairman. I have been a
supporter of STEP as a way to help small businesses market
their products overseas, and of course during the pandemic a
lot of the STEP money in Hawaii went for things like trade
shows, overseas trade shows, and obviously during the pandemic
that did not happen, so the small businesses had to become a
lot more creative and improve their ability to improve their
websites, et cetera.
How can programs like STEP help businesses build their
customer base through online platforms? What does SBA do to
help the small businesses?
Mr. Esparza. Indeed, Senator. One of the reimbursable
categories that we have is website development as well as
translating elements of the website into other languages so
that they are as relevant as possible to overseas customers.
At the same time, the Administrator has developed a Small
Business Digital Alliance at the SBA. We are working in
partnership with a number of big tech companies, including
payment processors and others that are engaged quite vigorously
in overseas commerce.
So it is the totality of these tools, the grant programs
that we have, the loans that we have, these types of
partnerships, that provide resources and opportunities for
small businesses to compete, and especially as the SBA
transforms and the economy transforms into a much more e-
commerce and digitally driven economy.
Senator Hirono. So Hawaii has received about $5 million to
date for STEP. I think it is to date. I am not sure. I am just
curious to know what kinds of--generally these are products,
not services. I do not know. Maybe it could be services and
products that can be exported overseas. Are they mainly
products that are exported?
Mr. Esparza. Thank you, Senator. About two-thirds of the
export economy is goods. One-third is services. Services is
growing, and digital services are a growing component of that
as well.
Senator Hirono. So in terms of products, I think for Hawaii
companies, overseas, they generally have been selling to Japan
or Korea, South Korea. So do you have any kind of--I am curious
to know--countries where the market expansion can occur for
businesses to really focus on certain markets, in certain
countries? Is that something that you all provide?
Mr. Esparza. Sure, Senator. Wherever a small business
believes their products or services are most relevant, we will
support them in understanding through market research and buyer
match and all those things that can support a given small
business.
Of course, there are 20 free trade agreements in effect in
the United States, and so where those particular relationships
and partnership have the least friction and the most robust
ability for small businesses to trade we often will direct
small businesses to those particular markets. But wherever
there is a market that a small business is interested in
trading, we will support them in that effort.
Senator Hirono. Do you have any kind of longitudinal
information on the small businesses that have been helped by
STEP and how long they last? Because, I mean, is that not one
of the indicators of success is how long the business lasts?
You said that a lot of them are individuals entrepreneurs. I
have very little sense of how long they are able to maintain
their businesses in this environment. Do you have any kind of
data along those lines?
Mr. Esparza. Senator, as a headline, at least, we know that
small business exporters are more resilient, are larger
employer firms. Again, the Chairman said the important stat
here which is that 95 percent of the world's consumers live
outside of the United States. So exporting companies, by
definition, have greater markets to go after, and over the long
term are more successful.
Now specifically with respect to longitudinal studies, I am
not familiar with any one that we have done in particular, but
I am happy to continue that conversation with you and your
office about the areas in which you would like to see some of
that research.
Senator Hirono. Well, when we think that in Hawaii this
program is mainly administered through the State Department of
Business, Economic Development, one would hope that they have
some data along these lines. To me, the long-term existence of
these entities is a desirable goal.
Thank you, Mr. Chairman. I yield back.
Chairman Cardin. Thank you, Senator Hirono.
I want to sort of qualify my response to Senator Marshall's
inquiry about Maryland, but broaden it to the national issues
as it relates to access to capital through the SBA.
Our experiences in the CARES Act in establishing the
Paycheck Protection Program, we recognized there was going to
be a challenge with commercial banks, particularly in a
pandemic, that there would be a challenge as to whether they
would be interested in these loans, and that we were concerned
that there would priority-setting on larger loans, larger small
businesses, and those with priority-existing relations.
That proved to be correct, despite the fact that we put in
the CARES Act language specifically directing the SBA to make
an effort to make sure that the potentially underbanked
community received priority treatment.
So we ended up allocating money to CDFIs to try to deal
with those that had more interest in working with smaller small
businesses and with those in underbanked and underserved
communities, and that worked, to a certain degree. Our later
numbers were much more successful, and quite frankly, I think
Administrator Guzman is very sensitive on this issue and she
has really reached out to get to underserved communities.
So I mention that because in the area of international
trade it is even more challenging because you do not have the
same number of banking institutions that are even interested in
dealing with international issues that may involve them being
complicated in their regulatory environment or in their
collection environment.
So talk a little bit about how we can strengthen the tools
within the SBA to be sensitive to the smaller small businesses,
those in underserved communities, particularly as it relates to
those that want to have a presence in international export.
Mr. Esparza. Well, if I may, Chairman, you started on the
banking component, and that is sort of, of the two sides of the
coin one is what we do for small businesses, one is what we do
for the lenders.
Part of our opportunity is to make sure that our products
and services are as relevant as possible to the banking
industry as it is to the small businesses who borrow from those
banks. And as you can probably imagine, a bank looks at a
typical small business and says, ``Is this small business
credit-worthy or not? Should we lend to them or not?''
And when it comes to exporting, it is seldom that a small
business is 100 percent an exporter. There is always some
combination of domestic sales and international sales that they
have. Nevertheless, our products are restricted to only
international sales or exports. Therefore, a bank looks and
says, ``Well, unless there is a specific purchase order, unless
there is a specific amount of inventory that is being
purchased, we have to give them a conventional loan or a
regular SBA 7(a) loan.''
As such, one of the things that we, of course, would want
to continue to work with you and this Committee on is evolving
our product set and the authority we have to work with lenders
such that in this case, instead of 100 percent nexus to
international sales, could it be some version of a majority, 51
percent or more, that allows us to have greater appeal to the
lending market just as much as an applicability to the small
business market?
Chairman Cardin. Does that require a statutory change?
Mr. Esparza. I believe so, yes.
Chairman Cardin. Well, we welcome your suggestions. As we
are looking at the reauthorization of the STEP program, these
are areas--we want to get broader into the international trade
arena. So I think we would be interested in your
recommendations in this area.
We would hope that the traditional tools, the 7(a) loans,
would be available to help those businesses that have a hybrid
type of business, but I can appreciate the fact that when you
had the special tools available to international commerce, we
want to make sure they are available, particularly for a young
company that is starting out, that may only have a very small
percentage of international commerce but wants to grow to a
bigger percentage.
Mr. Esparza. And indeed, Chairman, my team, over 20 export
finance managers who are spread around the United States, do
actually have expertise on the regular or non-international
specific loan products in the 7(a) portfolio. And I am
thinking, in particular, of the working capital products, the
CAPline product, such that we actually track and measure them
on being able to offer and underwrite both products.
Because we know, again, wherever there is a product that is
useful to a small business, we want to make sure we are
accomplishing their needs or fulfilling their needs wherever
appropriate. So whether it is a specific loan product that is
from our office, or our sister offices in the SBA, we are happy
to satisfy those interests however possible.
What I am simply suggesting is that we could continue to
evolve the Office of International Trade products in order to
make them that much more appropriate and relevant to both small
businesses as well as the lending community as well.
Chairman Cardin. And what is your relationship with the
resources partners such as the Women's Business Center or the
Veterans Outreach Centers, in order to try to get a more
diversified group of small businesses engaged in international
trade?
Mr. Esparza. So Administrator Guzman has tasked us with
fulfilling a one-SBA mindset. So we work very specifically and
closely not only across the SBA with resources that you talked
about, the Women's Business Centers, Veterans Business Centers,
the district offices around the United States, generally, but
we are in a unique position in the Office of International
Trade to be able to work across government, for purposes of
supporting exports from small businesses. That includes the
U.S. Commercial Service from the Commerce Department. That
includes the U.S. Trade Representative's Office. That includes
the State Department, the Agriculture Department, so many other
agencies of the Federal Government that all touch trade in some
form or fashion.
So we are plugged into those discussions, have a seat at
the table, and I find it personally fulfilling and a deep
responsibility to advocate for small businesses in all of those
interactions and discussions across the Federal Government.
Chairman Cardin. Thank you. Senator Rosen.
Senator Rosen. Thank you, Mr. Chairman. I was presiding and
I appreciate you waiting for me to get here from the floor.
First, thank you for being here and for the work that are
doing.
I want to speak a little bit about some of the burdensome
reporting requirements in the State Trade Expansion Program. We
will just call it STEP. It is a lot easier. It has been
essential for Nevada's small businesses and for our expansion
into foreign markets, and STEP has provided needed resources to
strengthen Nevada's economy, our global competitiveness, and
including half a million dollars in STEP funding that we
received earlier this month. So thank you for that.
In 2021 lone, Nevada exported $10.6 billion in goods to
foreign markets. We serve 191 countries and territories. But
even with that great success, those billions of dollars, I have
heard from STEP grantees with concerns about what they fear are
SBA's complex and burdensome reporting requirements and some
oftentimes unclear processes.
So, Mr. Esparza, I have also heard concerns from the State
Trade Offices about problems with the A-STEP online reporting
system, which they use to report expenses. Flaws in the system
can create costly administrative costs.
And so I am interested in hearing what you and your team
are doing to improve the A-STEP online reporting system for
both grantees and the trade offices.
Mr. Esparza. Thank you, Senator. As a general principle, I
find it important to make sure that I am listening to the
states, to all of our partners that provide feedback on how our
programs, products, and services are functioning, and you have
pointed out one in which I have heard, on several occasions,
and acknowledge.
With respect to A-STEP, which is the platform that we use
to gather information from the states on a quarterly basis, it
is a platform, a piece of technology that I give my predecessor
in the prior administration great credit for having had the
foresight and adopted. Prior to A-STEP, we were simply
collecting Excel spreadsheets from all the states, an even
worse process. And so I give him credit for having established
and had the foresight to invest in and establish the A-STEP
platform.
Now like all technology its rollout can be complicated with
hiccups, so we acknowledge those and continue to work through
that.
I will tell you that I have, not only through feedback
sessions, heard this feedback from the states. But I have now
acted upon that by setting my team out on a mission to
understand exactly, at the nth degree of detail, what these
processes are. And where we can either improve from a
technology standpoint or other processes to eliminate some of
the burden and create more efficiencies, we will make those
changes and recommendations.
We are happy to follow up with this Committee on what those
are, but you have my commitment that we will continue to look
for every opportunity to create more efficient processes.
Senator Rosen. I appreciate that. Our businesses do too.
Along that I would like to talk about expanding the allowable
expenses for our STEP grantees. I am the proud Chair of the
Subcommittee on Tourism, Trade, and Export Promotion in the
Commerce Committee. And so like everyone else, everyone here,
including the Chairman, we all know the importance of small
businesses receiving the resources they need to reach and
thrive, of course, in the foreign markets.
So through the STEP grants, Nevada small businesses are
able to participate in export promotion activities such as
export trade shows, exhibits, trading, market sales trips, and
other things to help diversify their global clientele.
However, in order to fully empower grantees to achieve STEP
program objectives, and for the SBA to meet key program
metrics, including increasing the number of small businesses
assisted, the value of export sales and return on investment
grantees, well, they just need more flexibility to ensure full
utilization of the grants they receive.
So with this in mind, do you plan to expand the list of
eligible STEP-funded activities and add new allowable expenses
to support our small businesses? If you are not, will you come
and engage with some of my businesses that are working on this?
And just how do I help Nevada businesses, and thus all
businesses across this country, grow in this area?
Mr. Esparza. Thank you, Senator, and indeed, international
tourism is an export.
Senator Rosen. Oh, it sure is.
Mr. Esparza. It is simply the presence of a foreign buyer,
so people bringing their foreign dollars.
Senator Rosen. Come to Las Vegas any time. We will show
you.
Mr. Esparza. Absolutely. The original statute had nine
expense categories in STEP, and the tenth being ``any other
category that the associate administrator deems appropriate.''
So I am consistently listening to and open to feedback.
In our partnership with SIDO, one of the organizations that
I mentioned in my opening statement, we are hearing very
specifically in some of the forums that we conduct what are
some of the ideas of other expense categories that would be
relevant. I continue to listen to those suggestions, and where
we find frequent suggestions of the same category we will take
those under consideration. And I hope to be able to, in spirit,
to provide as many reimbursable expense categories as possible.
Senator Rosen. If you need input, I have Nevada businesses
who are ready to have that conversation.
Mr. Esparza. We would be happy to take that input.
Senator Rosen. Thank you. Thank you, Mr. Chairman.
Chairman Cardin. Thank you, Senator Rosen, and thank you
very much for your testimony today. I appreciate everything you
are doing on behalf of small businesses.
We will now go to our second panel. And again, thank you,
Mr. Esparza. First let me introduce Shaun Akhavan, the Director
of Exports, Allied International, from Glen Burnie, Maryland.
Allied International Corporation is a leading purveyor of
packaged foods with exception value and quality. For over four
decades, Allied International has gathered the necessary
experience and expertise in this field and has established a
remarkable reputation in the United States and around the
world.
Our second witness is Grace Preston. Grace Preston is an
international sales and marketing executive with more than 20
years of experience. Throughout her career, Grace has helped
several U.S. companies expand their sales into international
markets. In 2019, Grace was awarded the SBA's Exporter of the
Year from New England for her work with a New England
manufacturer.
Grace joined Geophysical Survey Systems in early 2022, to
take their international sales to the next level. She has
traveled to more than 60 countries and all 7 continents.
Welcome to both of you. I want to tell you, we appreciate
you both being here. We certainly heard from the
Administration. It is nice to people who are experiencing this
firsthand, who have gone through the struggles of trying to
deal with international commerce. So thank you for sharing your
experiences with us today.
We will start with Mr. Akhavan.
STATEMENT OF SHAUN AKHAVAN, DIRECTOR OF EXPORTS, ALLIED
INTERNATIONAL, LLC, GLEN BURNIE, MD
Mr. Akhavan. Thank you, Mr. Chairman. I would like to thank
Chairman Cardin, Ranking Member Paul, and distinguished members
of the Committee for your time and for allowing me the
opportunity to testify here today on behalf of Allied
International Corporation, in support of reauthorizing the
Small Business Administration's STEP grant initiative.
Again, my name is Shaun Akhavan, and I am the Vice
President of Export for Allied International Corporation based
out of Glen Burnie, Maryland, a small family-owned business
that was established over 41 years ago and has been serving the
food industry. Since starting, we have become a trusted
purveyor of quality products both domestically and abroad. Our
portfolio maintains over 400 items that we offer under the
private label brands that we have created from the ground up.
We credit much of our success in our export sales to the
ability to attend international trade shows. At these
international trade shows, we have been able to meet many
potential buyers which have been instrumental to the
longstanding growth of our export business.
We applied for and received our first STEP grant in 2016.
These funds helped us to exhibit at SIAL Paris trade show in
October of that year. SIAL Paris is one of the world's largest
international food exhibitions and has been held biennially
since 1964. The funds covered a significant portion of our
registration fee and travel expenses. These funds, directly and
indirectly, generated over $200,000 in new export sales revenue
in the fourth quarter of 2016 through 2017.
Our success at SIAL Paris 2016 began a new phase for Allied
International's export efforts. Increased export revenue
encouraged us to exhibit at more international trade shows such
as Gulfood in Dubai, FoodEx in Japan, Seoul Food & Hotel in
South Korea, SIAL Shanghai in China, Anuga in Germany, and
others.
Since 2016, we have seen our export sales increase from
just 8.5 percent of our total sales in 2016, to 20 percent for
the current year. In addition, we have opened up distribution
in over 20 new markets including Mexico, Central and South
America, the UAE, the greater Middle East, South Korea, Japan,
China, and the Philippines, to name a few. Due to this success,
we applied and were approved for the STEP grant to use toward
our upcoming exhibition at the SIAL Paris 2022 trade show next
month. Upon our return, the funds that will be reimbursed to us
through this grant will help us greatly in furthering our
business.
In reviewing Allied's history, where we came from, and
where we are today, we are extremely grateful for the support
we have received, especially when we were just starting our
organized export and did not have a substantial understanding
of the nuances of exporting or a wide network of business
partners.
A grant such as the STEP grant, early on for the start of a
company's export program, will allow the opportunity,
confidence, and financial assistance to the company for
starting an export program that they may not have otherwise
started on their own. Even though the benefits of attending a
trade show are many for a company that wants to start or expand
its export reach, sometimes the companies need a little extra
support to take the first step.
A small business can use the STEP grant money in many ways
to help with the expenses of attending an international trade
show. The money can of course help with any of the travel
expenses. However, in addition to the travel expenses, it can
help with hiring a translator to help with the language gaps,
or it can be used for paying for other learning opportunities
such as workshops, lectures, and seminars to expand one's
knowledge of exporting.
One of the most important investments that a company can
make is in a website for international marketing and
networking. Companies can put their names, their brands, and
their products on the web to reach a worldwide audience. They
can introduce their company and its products to customers with
whom they normally would not have the opportunity to connect
with in person. Even in this day and age where technology is so
heavily relied on, many international companies do not have an
adequate presence on the internet and are not easily accessible
to those who do not attend international trade shows.
In working with many countries in various parts of the
world, I know firsthand that there are many opportunities to
capture the business of overseas customers that are very eager
and excited to import American-made products and welcome the
opportunity to connect with American companies. When attending
and exhibiting at an international show, businesses like Allied
International can learn firsthand about these different markets
and what their specific needs are. They can build their export
knowledge to build strong bonds with these eager customers that
will continue for years, if not decades.
The benefits are numerous when I think of the knowledge,
connections, and confidence that is to be gained from attending
an international trade show, as well as working internationally
in general. Providing any support to give small businesses a
leg up to reach these resources can be instrumental to the
success of their export program.
Finally, I would like to commend Michael Howley and the
entire Maryland Department of Commerce for assisting us with
our STEP grant applications.
Senators, Chairman, once again I thank you for all of your
efforts on behalf of the U.S. small business community, and for
the opportunity to appear before you today.
[The prepared statement of Mr. Akhavan follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Cardin. Thank you very much for your testimony.
Ms. Preston.
STATEMENT OF GRACE PRESTON, INTERNATIONAL SALES MANAGER,
GEOPHYSICAL SURVEY SYSTEMS, INC., NASHUA, NH
Ms. Preston. Chairman Cardin and esteemed members of the
Small Business and Entrepreneurship Committee, thank you for
allowing me to be here today to provide testimony. My name is
Grace Preston. I am the International Sales Manager at
Geophysical Survey Systems, Inc., GSSI. We are based in Nashua,
New Hampshire.
GSSI manufactures Ground Penetrating Radar, GPR, for a
variety of applications such as underground utility location,
concrete inspection, road and bridge inspection, geological
assessment, archeology and forensic discovery. Our products are
essential in maintaining the health of our infrastructure and
for advancing scientific understanding of the natural world.
GSSI products can be found in use in over 100 countries and on
all 7 continents.
I am here today to speak about the importance of the SBA
STEP grant funding to small businesses like GSSI. Frankly,
without the assistance provided to us through the STEP grant as
well as other state and Federal programs, we would not have
enjoyed the sustained level of growth necessary to succeed in
an increasingly competitive marketplace. In short, the
resources available to us through these programs have enabled
us to have a presence, be competitive, and succeed in worldwide
markets.
Like most small companies, GSSI has limited resources
dedicated to growing business outside the U.S. We are too small
to have a direct presence in foreign markets and must seek
partner companies to promote and distribute our products. A
commitment to play in the international space requires an
immense undertaking involving different languages, different
cultures, and often different business practices. But also huge
potential if one has the patience and the right help to tackle
it. For us, an indispensable part of that help has come in the
form of the STEP grant and the programs offered under this
grant.
GSSI first utilized the STEP grant in 2016, to assist in
finding a new partner in Korea. Our feeling was that we were
not realizing the full market potential, but had no way of
tapping into it. The STEP grant was used to fund a Gold Key
Matchmaking Service through the U.S. Department of Commerce's
U.S. Commercial Service. We have found the Gold Key service to
be the single most effective method for finding a local
partner. This service allows us to put forth the ideal profile
of a local partner/reseller and detail our goals for the
market.
Lacking the resources and local ``street cred,'' the U.S.
Commercial Service staff based in Korea worked their local
contacts and knowledge of the market to provide a short list of
companies that they believed to be a match to help us grow our
Korean business. From this, we found one company that rose to
the top, and we can happily report that we have grown our
business in Korea by more than 300 percent. We would have not
achieved this immediate, effective growth without the STEP
funding and the programs offered under the grant.
I want to share one really key metric for you. It speaks
volumes. We sold $1.1 million worth of our products in Korea
through this new partner in 2020, at the height of COVID.
Imagine where our company might have been in 2020 COVID time
had we not found this key partner, all as a result from the
STEP grant and the dedicated professionals at the U.S.
Commercial Service offices in Korea and in our home state of
New Hampshire.
Other examples of how the STEP grant has helped GSSI
include funding another Gold Key Matchmaking Service in Mexico
through the U.S. Commercial Service as well as an Initial
Market Check in Panama. The net result of these two activities
was that we established a new partner in Mexico that today
generates more than $100,000 in annual sales.
For Panama, we realized that the market was not right for
us, and it allowed us to limit our expenses and our efforts,
and we turned those resources and efforts elsewhere where they
were more needed. Could we have accomplished this on our own?
Absolutely. However, it would not only cost us exponentially
more, but could have taken years to achieve a potentially
similar outcome. And as we all know, time is money, and must be
used wisely.
Market intelligence is also a critical foundation to
succeed in any market. When you are not able to physically be
in a market more than one week a year it is difficult to get a
full picture of what that market has to offer, where the
government spending is focused, who the key players are, and
what the competitive landscape looks like.
This year, GSSI was able to fund a market research report
via the STEP grant that provided valuable insight on three
markets--Spain, Norway, and the Philippines. The information we
received, particularly on the Philippine market, has enabled us
to basically ``trust but verify'' some understanding we already
had and positioned us very well in a competitive bid situation.
We are confident that this information will help us win the
first major project with a Philippine Government Authority. Had
we not performed this research, it is doubtful our bid would
have been taken seriously. Just another example of how a little
help can provide long term success and growth.
The STEP grant has helped us compete on the worldwide stage
against European, Canadian, and Chinese companies. With some of
these companies supported by their governments, the competition
can be tough. The STEP grant has helped to level the playing
field, giving us the opportunity to get superior American-
designed and American-made products into the hands of an ever-
increasing number of customers around the world. In recognition
of our export success, GSSI was the proud recipient of the
President's E Award for Exports in 2019.
Since the initial use of the grant, GSSI continues to
utilize the programs funded through the grant to catapult not
only our export growth but GSSI's overall growth. Today, GSSI's
export sales contribute to approximately 50 percent of our
overall company revenue, and we look forward to continued
growth in the coming years. This has enabled us to add more
jobs. Since 2015, we have increased our employee count by 20
percent, and we currently have several open positions in sales,
engineering, manufacturing, and support.
Our export-driven success also contributes to our greater
ecosystem through supporting local, regional supply chain
vendors, many of which are within 100 miles of our facility, to
offering an annual $10,000 college scholarship to an employee's
family member.
The success beyond our borders helps to contribute to our
local community. Bottom line is that more Americans are working
in good-paying jobs and our local communities are reaping the
benefits as a direct and indirect result of this valuable
program.
Exports matter. I have built my career on it. Help in
achieving those exports faster and easier is invaluable to GSSI
and other small businesses. Thank you, Chairman.
[The prepared statement of Ms. Preston follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Cardin. Well, I want to thank both of your
testimony. You know, we talk about how important small
businesses are to our economy and community. You all have
demonstrated that by your success in using ingenuity, dealing
with the challenges of today, and figuring out a better way to
get a product onto the market and being able to get that
product into the international marketplace. As a result, you
have created jobs, you have strengthened our economy. You have
done everything we believe small business can do.
But when you are in international commerce, as you both
point out, there are additional hurdles: How do you make the
connections? How do you deal with the language barriers? How do
you deal with the knowledge of the international marketplace?
And you have given us concrete information as to how the SBA,
and particularly the STEP program, but also the International
Trade Office has helped in that regard.
As I said in my opening comments, the member of the United
States Senate that is responsible for the STEP program is
Senator Shaheen. She has been the champion of this program. She
has seen it. She has made it permanent. She has expanded it.
She promotes it. And I want to thank her for her extraordinary
leadership. I think we have two companies here today that have
benefitted from her leadership, and I will now call on Senator
Shaheen for her comments or questions.
Senator Shaheen. Well, thank you very much, Mr. Chairman,
for that glowing introduction. I really appreciate that, and I
appreciate the testimony of our two witnesses today,
particularly Ms. Preston, who you have given us not only your
experience at GSSI, which I can also attest has amazing
technology, having visited there, but your personal experience
with exporting and the challenges that small businesses faced.
I am sorry I missed our other witness testimony today, but
I know you were equally eloquent.
One of the things that I think is important about the STEP
program is that it is the only Federal program that supports
small businesses and exporting. And we know that 95 percent of
markets are outside of the United States but only about 1
percent of small and medium-sized businesses export. So the
more we can do to help provide that assistance to small
businesses in identifying those markets and getting into them,
the better. And as you point out, Ms. Preston, that is one of
the things the STEP program has helped GSSI do.
I wish the Assistant Administrator were here to have heard
your testimony, because one of the concerns that we have heard
in New Hampshire about the STEP program is the potential for it
to coordinate better with other Federal agencies. So I wonder,
Ms. Preston, if you could speak to what your experience has
been and whether you see ways in which STEP can better
coordinate with other Federal programs.
Ms. Preston. Thank you for the question, Senator, and thank
you for all of your efforts for the great state of New
Hampshire.
I think the program, it is evolving, and what worked 10
years ago is not necessarily working today. So we have
eliminated a lot of the bureaucratic barriers to accessing the
funding and accessing the programs. I would just say continue
on that, and what might work for GSSI may not work for another
small companies. So listen to the companies. If they are coming
to the table with a program that they want to use the funding
for, I would just recommend being open to that and eliminating
barriers to using the grant to get to those markets that have
potential.
Senator Shaheen. And you mentioned the bureaucracy and the
paperwork that has often been involved in getting a STEP grant.
Can you talk about what you see that could be done to help
reduce some of that paperwork and how that would be helpful to
the company?
Ms. Preston. I think we talked about it earlier when you
were not in the room, Senator. I think the SBA is looking at
ways to automate it and make it easier, but it is not a light-
switch moment. So I think making it easier to just kind of
submit all the requirements for the funding would help most
companies, because we do not have the resources. We do not have
a big staff of people that can do the work. So it is usually
somebody like myself in an organization that is submitting all
of the paperwork and the receipts and the requests.
Senator Shaheen. Thank you. Mr. Akhavan--is it Akhavan?
Mr. Akhavan. Akhavan, yes.
Senator Shaheen. Do you have anything to add to that?
Mr. Akhavan. I either have very, very efficient assistant
or the program is extremely easy to apply for the STEP grant. I
never had a problem. As I mentioned earlier, Michael Howley
from Maryland has been extraordinarily helpful, and I think it
depends on the individual that is helping us. It has been very
straightforward, very painless, I would say.
So I do not have anything but good things to say about the
program and the way we have been applying for it.
Senator Shaheen. Good. And I assume that both of you would
agree that fully funding the program to the authorized level
would be very helpful. As I look at the performance data for
STEP, I think it is important to point this out into the
record, Mr. Chairman, that STEP had a return on investment of
42-to-1 for the dollars invested, that STEP grants led to $974
million in export sales, that assisted over 7,000 small
businesses, and enabled nearly 3,000 new-to-export small
businesses to explore significant new trade opportunities.
So I think in the last year of funding we have
significantly underfunded the program. We have not been to its
authorized level of $30 million a year. Would that be helpful
if there were more funding available? Do you think we could see
an even bigger return on those STEP dollars? Ms. Preston?
Ms. Preston. Thank you, Senator. I think for us,
definitely. It just helps us with the resources that we have,
our limited resources that we have to reach more markets and to
talk to more people and get our products out there.
Senator Shaheen. Thank you. Thank you, Mr. Chairman.
Chairman Cardin. I want to thank both of you again. Mr.
Akhavan, you particularly point out, it is impressive that you
went from, if I remember correctly, 8.5 percent to 20 percent
of your sales in exports over a period of years, that you
received some assistance from the SBA over several years. It
was not just a one-off situation.
Mr. Akhavan. Yeah. Since 2016. So up to this year it has
been----
Chairman Cardin. And the reason I underscore that is that,
yes, we want to help you to attend a trade show. You can make
connections. But that is not the end of the assistance you need
in order to be able to expand your export market.
Mr. Akhavan. Well, Chairman, the more we attend the trade
shows, the more credibility we have in front of our buyers
abroad. The first time they see us excited, want to do business
with American companies and buy American products. But the more
they see us at these trade shows, and most of these trade shows
are annually. Some of them are every couple of years.
So it really helps with these extra funds for us to be able
to attend more trade shows than we possibly can with our own
resources. And there are other programs as far as trade
missions, help with data, that you mentioned, and intelligence,
market reports. And I think that also helps us with the market
for exports.
Chairman Cardin. Impressive results. Both of you,
impressive results. As I said, you are the model. We know small
businesses will lead our economy. When you go through tough
times it is a little more challenging. And to get into new
markets it is always more challenging. So I think your
testimonies have been extremely helpful.
Well, our champion, as a small business owner on this
Committee, is Senator Hickenlooper, having gone through the
trials and tribulations as a small business owner. I am going
to turn the gavel over to Senator Hickenlooper so I can go cast
my vote, and I thank him for his leadership on this Committee.
Senator Hickenlooper [presiding]. Thank you, Mr. Chair, for
the gavel and all your hard work putting this together, and so
many other good meetings together. I am so glad I made it
before we closed down.
And Ms. Preston, I used to be in the oil and gas business,
and I was a good friend of a guy name Rutt Bridges who created,
or helped create, was a large part of creating the first
desktop processing, you know, desktop computer processing for
seismic lines, way back when in the 1983, 1984, 1985 period,
when people did not do that kind of thing. And his was a very
small business that grew to be a pretty large business.
Anyway, my small business, we spent a lot of time dealing
with government agencies. When I first started I got several
SBA loans and support. But obviously--I owned a bunch of
restaurants--I did not do international trade administration-
related stuff.
But I did see much of the red tape and bureaucracy and the
time it takes to work through some of these processes. You
know, you worked through a number of government agencies. What
is your view--and I ask this all the time--of how can we
streamline the process? How would you suggest someone like me,
who is interested in that efficiency, what should I prioritize?
Ms. Preston. Thank you for the question, Senator. I am
happy to be here. Thank you. I think we have a unique situation
in the state of New Hampshire because we do have a couple
offices that lead that charge, so they champion navigating,
helping us navigate through the system. So for us, in New
Hampshire, we do have bureaucracy but we have people that are
helping us along, and I think that is very helpful.
I do not know if you have anything to add to that. I think
you had the same experience in Maryland as well, that you have
a champion in Maryland that is helping you through.
Mr. Akhavan. Absolutely. We have not had any problem.
Actually, it has been pretty easy, and as I mentioned earlier,
painless to apply and get these grants and work with Small
Business Administration.
Senator Hickenlooper. I love that. That is the best answer
I could hope for. It is not the common answer.
Mr. Akhavan, you know, critical to any assistance program
that we put out there--I can ask this of both of you--you know,
are most small businesses aware of the array, say, the STEP
grants, and what kinds of outreach should we be contemplating
to try and make sure more people are aware of what is out
there?
Ms. Preston. Thank you again, Senator, for the question,
and I think that is a challenge. I think there are a lot of
people out there that do not know what programs are out there.
And in the state of New Hampshire, the Office of International
Commerce from the state and the U.S. Commercial Service part of
U.S. Department of Commerce, as well as the local SBA office do
a lot to outreach and get the message out.
Again, we are a state of million people. We are spread out
quite a distance, but we have a very small business community.
So again, with the state of New Hampshire I think we are doing
very well with the state and Federal partners we have in
getting the word out.
And also I think reading success stories like GSSI helps
people understand that there is money out there, you know, to
help them along the way, and to help them achieve success in
other markets.
Senator Hickenlooper. Yeah, I think you are right. Mr.
Akhavan.
Mr. Akhavan. Well, in fact, we have been pretty lucky in
the state of Maryland. We have constantly been contacted by the
Department of Commerce, asking us what kind of help we need,
and it has been refreshing. A few years back, going to maybe 10
years ago, when our offices were in Virginia before we moved to
Maryland, they were equally as helpful, equally as avant-garde
in coming and encouraging us to be part of the export market.
And it has just been their encouragement that actually helped
us expand our export sales from 8.5 percent of our total sales
in 2016, to over 20 percent this year.
Senator Hickenlooper. Let me ask one last question, and you
will hear it just from me. So if you are ready to go you can
just raise your hand and I will let you slip away.
Have you guys worked with any of the fintech companies in
terms of helping you to establish expansion of your export
businesses? Because I have heard a couple of people who have
said that they were more willing to give loans to help expand
international trade than most of the banks were. That is
anecdotal. I am still collecting my anecdotal evidence.
Ms. Preston. For GSSI it is really not a good fit for us.
It does not really apply to our market. So I would say no, we
have not.
Senator Hickenlooper. Okay.
Mr. Akhavan. My experience with the export market and our
customers, they are willing to pay 100 percent beforehand. So
actually financing has never been a problem. If they really
want to have us help them they will come up with a 30 percent
deposit, and once we start manufacturing for them and before
shipping they will send the 70 percent.
So I do not think financing is a major problem with export
because people around the world, especially in food products,
they would just love to buy. And as a matter of fact, we were
just making a joke in the office that we came back from a trade
show in Dubai in February, and few markets, especially Saudi
Arabia, we just have four or five people just want our
products. And we ended up saying, ``Okay, we are going to give
you all the products, but we are going to give you different
labels,'' which has really helped us capture that market.
Still, to this day, when we just came back from a trip to
Singapore--I have been traveling--another customer from Saudi
Arabia said, ``We need your product.''
So at this time it is refreshing to see that people around
the world want U.S.-made products, because it is equal to
quality. And price has never been a problem because although we
are in a very competitive price market here in the U.S., the
price of food is much higher in the rest of the world, so we
really do not have that competition.
Senator Hickenlooper. Wow. That is good to hear.
Mr. Akhavan. Absolutely.
Senator Hickenlooper. Thank you all. We will keep the
record open for two weeks to allow for statements and questions
for the record. So with that this hearing is adjourned.
[Whereupon, at 3:51 p.m., the Committee was adjourned.]
[all]