[Congressional Record Volume 142, Number 14 (Thursday, February 1, 1996)]
[Extensions of Remarks]
[Page E142]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         SMALL BUSINESS EXPORT WORKING CAPITAL ENHANCEMENT ACT

                                 ______


                        HON. JOHN ELIAS BALDACCI

                                of maine

                    in the house of representatives

                       Thursday, February 1, 1996

  Mr. BALDACCI. Mr. Speaker, as a small businessman, I am acutely aware 
of the fact that small businesses are the engines that drive our 
Nation's economy. I also recognize that these businesses often need 
assistance so that they can expand and increase employment.
  As part of their efforts to expand, many small businesses have begun 
to recognize the potential of markets outside of the United States. In 
fact, the percentage of small firms involved in exporting is projected 
to increase from 23 percent to 33 percent by the year 2005. Realizing 
the potential of foreign markets, delegates to the White House 
Conference on Small Business recommended that the Federal Government 
provide export assistance to small businesses, and make export finance 
more available to these firms through Federal guarantees.
  Currently, the Small Business Administration has a short-term 
financing program for export transactions. The SBA's Export Working 
Capital Program, which works in conjunction with the Export-Import 
Bank, provides loan guarantees to finance small business exports. Until 
last year, the SBA and the Eximbank harmonized their export loan 
programs to ensure that all borrowers would have the same loan terms. 
Both provided a 90 percent guarantee rate on loans. Businesses seeking 
to borrow less than $750,000 would apply for an SBA guaranty. Those 
seeking more than $750,000 would deal with the Eximbank. Unfortunately, 
the SBA guarantee rate was reduced in small business legislation we 
enacted last year. As a result, a disparity has been created between 
the guarantee rate offered to small businesses by the SBA, and the rate 
offered to larger businesses by the Eximbank. This will likely have a 
chilling effect on small business lenders who will have to incur 
greater risk in financing small business exports.
  Mr. Speaker, that is why I am introducing legislation today to 
restore the 90 percent guarantee rate for small businesses who finance 
their export transactions through the SBA's Export Working Capital 
Program. My bill will place small businesses back on a level playing 
field with larger businesses. This is only fair.
  Exporting can be a very lucrative business for many of these firms. 
It's also beneficial for our Nation's economy. The Labor Department 
Estimates that for every $1 billion in increased trade, 20,000 
manufacturing jobs and 40,000-60,000 service and support jobs are 
created. Moreover, wages are 22 percent higher on exported goods.
  I don't believe anyone in this Chamber would intentionally 
discriminate against small businesses who wish to export their 
products. That is why it is important that we restore the 90 percent 
guaranty rate to the Export Working Capital Program.
  The SBA has been invaluable in helping small businesses enter 
international markets. Nationally, exporters received a total of 1,161 
loan from the SBA for more than $481 million in fiscal year 1994. It is 
imperative that we continue to help the SBA help on small businesses 
through the Export Working Capital Program. I urge my colleagues to 
show their support for small business exports by cosponsoring this 
legislation.

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