[Congressional Record Volume 146, Number 116 (Tuesday, September 26, 2000)]
[House]
[Pages H8084-H8086]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EXPORT WORKING CAPITAL LOAN IMPROVEMENT ACT OF 2000
Mr. MANZULLO. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 4944) to amend the Small Business Act to permit the sale of
guaranteed loans made for export purposes before the loans have been
fully disbursed to borrowers.
The Clerk read as follows:
H.R. 4944
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Export Working Capital Loan
Improvement Act of 2000''.
SEC. 2. SALE OF GUARANTEED LOANS MADE FOR EXPORT PURPOSES.
Section 5(f)(1)(C) of the Small Business Act (15 U.S.C.
634(f)(1)(C)) is amended to read as follows:
``(C) each loan, except each loan made under section
7(a)(14), shall have been disbursed to the borrower prior to
any sale.''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Illinois (Mr. Manzullo) and the gentlewoman from New York (Ms.
Velazquez) each will control 20 minutes.
The Chair recognizes the gentleman from Illinois (Mr. Manzullo).
Mr. MANZULLO. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, H.R. 4944 makes a technical correction to the Export
Working Capital Guarantee Program of the Small Business Administration.
The export working capital program provides a 90 percent guarantee for
revolving capital needs covering up to $750,000 for small business
exporters.
However, this is a very underused program. Only 429 international
trade loans were facilitated by this program in 1999. 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 infrequently. Current law requires that all 7(a) loans,
including export working capital loans, must be fully disbursed to the
borrower prior to becoming included in the 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
export working capital loans to be sold to the secondary market.
Passage of H.R. 4944 hopefully will free up more trade financing for
small business exporters.
{time} 1215
The lack or the complexity of trade finance is a major barrier to
small businesses.
Last month, I participated in a forum in Rockford, Illinois, in the
district I represent, a forum which was sponsored by the Office of
International Trade at the SBA to encourage more local banks to become
interested in trade finance. This is a difficult process, because even
in this era of globalization, many bankers are still not quite sure how
they can be repaid for international loans.
H.R. 4944 will remove the uncertainty for small or international
trade loans administered by the SBA. The bill will make trade finance a
more attractive option for banks. Increasing the availability of export
finance thus will encourage more small businesses to enter into the
trade arena.
Mr. Speaker, if my colleagues have seen the recent headlines about
U.S. trade deficits hitting another record, we must be concerned, as I
am, about our national export strategy. For the month of July, U.S.
exports dropped 1.5 percent.
While this bill is surely not a cure-all to this program, it is one
small step we can take to encourage more lenders to offer trade finance
to small business exporters.
Mr. Speaker, I urge my colleagues to support me and join me in voting
for the Export Working Capital Loan Improvement Act of 2000.
Mr. Speaker, I reserve the balance of my time.
Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may
consume.
[[Page H8085]]
Mr. Speaker, I rise in strong support of H.R. 4944, the Export
Working Capital Loan Improvement Act of 2000. The change proposed in
this bill will make an exception to the requirement that export working
capital loans will fully be disbursed before they can be sold on the
secondary market.
This exception would only be carved out for export working capital
loans and will not apply to any other SBA loan programs. This change is
necessary so that SBA can sell export working capital loans on the
secondary market. Selling loans on the secondary market is an important
part of the SBA's financial planning, as it keeps the subsidy rate for
the loan programs down, therefore requiring less direct appropriation
from Congress.
Mr. Speaker, the Export Working Capital Program, a combined effort of
the SBA and the Ex-Im Bank, is an important program that provides
short-term working capital to small business exporters. The two
agencies have joined their working capital programs to offer an
efficient, unified approach to the Federal Government's support of
export financing.
The technical change in this bill is important to the long-term
stability of the Export Working Capital Loan Program, and, more
importantly, to the small businesses that use the program.
According to a joint SBA and Commerce Department study, nearly 97
percent of the U.S. firms engage in exporting our small businesses.
This same study shows that small business accounts for nearly one-third
of total U.S. export sales.
And according to U.S. Census Bureau data, about 88 percent of the
U.S. companies engage in exporting are small business with fewer than
100 employees. Small businesses are the engine driving our economy; as
such, small business exporters play an important role in our economic
success.
Mr. Speaker, I would like to commend the sponsor of the bill, the
gentleman from Illinois (Mr. Manzullo), for bringing this matter to our
attention. This problem is an example of the unintended consequences
that statutes can have, and it says a lot about the nature of the
Committee on Small Business that we caught the problem and are working
to correct it in a bipartisan manner.
Again, I support the legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. MANZULLO. Mr. Speaker, I have no more speakers, and I reserve the
balance of my time.
Ms. VELAZQUEZ. Mr. Speaker, I yield 2 minutes to the gentleman from
Illinois (Mr. Davis).
(Mr. DAVIS of Illinois asked and was given permission to revise and
extend his remarks.)
Mr. DAVIS of Illinois. Mr. Speaker, I, first of all, want to commend
my colleague, the gentleman from Illinois (Mr. Manzullo), for
introducing this legislation.
Mr. Speaker, I rise in strong support of H.R. 4944, the Export
Working Capital Loan Improvement Act. The Export Working Capital Loan
Improvement Act of 2000 makes a technical correction to the Small
Business Act that will enable the Small Business Administration to sell
export working capital loans on the secondary market.
This program provides transaction-specific financing of loans of
$833,333 or less. Small business exporters may use this program for
preexport financing of labor and materials, financing receivables
generated from these sales and/or standby letters of credit used as
performance bonds or payment guarantees to foreign buyers.
Enabling the sale of these loans on the secondary market will
increase the attractiveness of export working capital loans to lenders
to be used as performance bonds or payment guarantees to foreign
buyers.
It would relieve them of the cost of servicing and paperwork on small
short-term loans. While the authority exists to sell export working
capital loans, secondary market sales of SBA guaranteed loans are
conducted infrequently, which create a technical problem affecting
these short-term loans.
Mr. Speaker, H.R. 4944 streamlines the entire process. The committee
changes are simply the latest in a series of Small Business
Administration program enhancements designed to meet small businesses'
needs for a simple process with flexible requirements and fast delivery
of financing.
Again, I want to commend the Committee on Small Business for its
bipartisan work. I want to commend and congratulate the gentleman from
Illinois (Mr. Manzullo) for an important piece of legislation, because
what he has done has simply been to take a good program and make it
better.
Mr. MANZULLO. Mr. Speaker, I reserve the balance of my time.
Ms. VELAZQUEZ. Mr. Speaker, I yield 3 minutes to the gentlewoman from
California (Ms. Millender-McDonald).
Ms. MILLENDER-McDONALD. Mr. Speaker, I thank the gentlewoman from New
York (Ms. Velazquez) for yielding the time to me. Let me also join the
refrain and thank the gentleman from Illinois (Mr. Manzullo), chairman
of the Subcommittee on Tax, Finance and Exports, as well as the
gentleman from Missouri (Mr. Talent), chairman of the Committee on
Small Business, and the gentlewoman from New York (Ms. Velazquez), the
ranking member, for their leadership in bringing forth this outstanding
piece of legislation.
Mr. Speaker, as the ranking member of the Subcommittee on
Empowerment, I rise in strong support of the National Small Business
Regulatory Assistance Act. This bill will offer small businesses a
voluntary, confidential and nonpunitive way to obtain assistance in
complying with regulations through the small business development
centers.
It creates partnerships with the Federal agencies to encourage them
to increase outreach efforts to small businesses which will improve
compliance with regulations and establish a mechanism for unbiased
feedback from SBDCs to Federal agencies on regulatory environment.
Specifically, H.R. 4946 will establish a pilot program that sets 20
SBDCs as points of contact and advice for small businesses with
concerns about regulatory compliance.
The selected SBDCs will coordinate and develop partnerships with
Federal agencies for the provision of much-needed advice to small
businesses. The SBDCs will be charged with sending information obtained
from Federal agencies concerning contradictory or confusing advice on
regulations to the National Association of Small Business Development
Centers. The ASBDCs will then prepare a report for the President, the
Small Business Regulatory Enforcement Fairness Ombudsman, and the House
and Senate Small Business Committees.
Mr. Speaker, with so many small businesses overwhelmed by growing and
constantly changing State, Federal, and local regulatory requirements
and in fear of penalties for noncompliance, the time has come, Mr.
Speaker, for Congress to help these businesses understand and comply
with the various regulations.
In the past 20 years, the Federal Register, which lists all of the
regulations and changes, grew from 42,000 to a record rate of 73,879
pages in 1999. Small businesses want to comply with the numerous
regulations, but they often just do not know what to do.
The National Small Business Regulatory Assistance Act will offer
these small businesses critical assistance by turning confusion into
clarity through these pilot programs.
I urge my colleagues to support me and all of those who work on small
businesses to pass this very good and common sense legislation.
Mr. Speaker, I support the Export Working Capital Loan Improvement
Act because it will implement crucial technical changes which will
streamline the entire small business loan process and help America's
dedicated small business owners continue to grow and stimulate our
strong economy.
Small firms represent 97 percent of all companies working within the
United States import/export marketplace. Small businesses account for
nearly one-third of total U.S. export sales and approximately 88
percent of the U.S. companies engaged in exporting are small business
with fewer than 100 employees. The Export Working Capital Program
[ECWP] loan program is designed to provide short-term ``working
capital'' loans for small businesses in the import/export business. The
current ECWP loan process allows the Small Business Administration to
only sell loans on the secondary market if the loan has been fully
disbursed to the borrower. This creates a quandary for the SBA and the
EWCP because the SBA only makes loan disbursements once
[[Page H8086]]
a month for all of its loan programs. Also the EWCP loans tend to be
very short-term loans--often less than a year in length. As a result,
many small businesses owners are left to squander for critical dollars
in order to maintain their businesses. By providing an exception that
would allow SBA to sell these loans into the secondary market, the SBA
will be able to improve its long-term financial planning and streamline
loan operations for import/export businesses. While this may appear to
be a small change, this legislation will expand SBA's ability to reach
into every sector of the economy and to help more small business
owners.
I urge my colleagues to join me in voting for America's hard working
small business owners by voting ``yes'' on Export Working Capital Loan
Improvement Act.
Ms. VELAZQUEZ. Mr. Speaker, I yield back the balance of my time.
Mr. MANZULLO. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Simpson). The question is on the motion
offered by the gentleman from Illinois (Mr. Manzullo) that the House
suspend the rules and pass the bill, H.R. 4944.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
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