[Congressional Record Volume 146, Number 98 (Tuesday, July 25, 2000)]
[Extensions of Remarks]
[Pages E1313-E1314]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   INTRODUCTION OF THE EXPORT WORKING CAPITAL IMPROVEMENT ACT OF 2000

                                 ______
                                 

                        HON. DONALD A. MANZULLO

                              of illinois

                    in the house of representatives

                         Tuesday, July 25, 2000

  Mr. MANZULLO Mr. Speaker, I am pleased to introduce H.R. 4944. The 
Export Working Capital Improvement Act of 2000. The Export Working 
Capital Guarantee Program (EWCGP) is subset of the popular 7(a) loan 
program at the Small Business Administration (SBA). It provides 90 
percent guarantee for revolving capital needs for small business export 
financing. The SBA acts on loans for small business exporters that are 
under $750,000--the Export-Import Bank of the United States (Ex-Im) 
provides export working capital for loans over $750,000. These working 
capital loans are generally short-Term financing. Loans can be made for 
single or multiple export sales and can be exended for pre-shipment 
working capital and post-shipment exposure coverage. However, this is a 
very underutilized program.
  The problem is that the SBA would like to be able to sell these loans 
on the secondary market. However, secondary market sales of guaranteed 
loans are conducted every six months. Current law requires that all 
7(a) loans, including Export Working Capital loans, must be fully 
disbursed to the borrower prior to being included in a secondary market 
sale. Export Working Capital loans are often approved, disbursed, and 
repaid so quickly that they miss the window of opportunity for 
inclusion in a secondary market sale.
  The purpose of the Export Working Capital Loan Improvement Act of 
2000 is to exempt Export Working Capital loans from the disbursement 
requirement under the SBA's 7(a) loan program. This change will allow 
the inclusion of Export working Capital loans prior to disbursement in 
sales to the secondary market.
  The Office of International Trade at the SBA believes that if Export 
Working Capital loans are allowed to be sold on the secondary market, 
more export finance would be available to small business exporters in 
many regions of the country. This would provide one answer to the 
problems of a lack of trade finance for small business exporters.
  According to the Commerce Department, between 1987 and 1997, the 
number of small business exporters has tripled, going from 66,000 to 
202,000. Small businesses now account for 31 percent of total 
merchandise export sales spread throughout every industrial 
classification. What is more surprising is that the fastest growth 
among small business exporters has been with companies employing fewer 
than 20 employees. These very small businesses represented 65 percent 
of all exporting companies in 1997.
  Despite these encouraging statistics, there is still more work that 
needs to be done. Even

[[Page E1314]]

though the number of small business exporters tripled, they form less 
than one percent of all small business in the United States. Even among 
these cutting-edge firms, nearly two-thirds of small business exporters 
sold to just one foreign market in 1997. In fact, 76 percent of small 
business exporters sold less than $250,000 worth of goods abroad. In 
other words, these are ``casual'' exporters. The key is to encourage 
more small businesses to enter the trade arena and then to prod 
``Casual'' small business exporters into becoming more active.
  Increasing the availability of export finance can help achieve this 
goal. I urge my colleagues to join me in supporting the Export Working 
Capital Loan Improvement Act of 2000.

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