[Congressional Record Volume 152, Number 92 (Friday, July 14, 2006)]
[Senate]
[Pages S7555-S7556]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

  By Ms. LANDRIEU (for herself, Mr. Kerry, Mr. Bayh, and Mr. Pryor):
  S. 3663. A bill to amend the Small Business Act to increase the 
maximum amount for international trade loans, to direct the 
Administrator of the Small Business Administration to assign an 
international finance specialist, and for other purposes; to the 
Committee on Small Business and Entrepreneurship.
  Ms. LANDRIEU. Mr. President, the gulf coast has made good progress in 
rebuilding after last year's hurricanes. Our small businesses and 
entrepreneurs have led the way in this recovery. As all of my 
colleagues know small businesses are the engines of our economy driving 
innovation and growth.
  Following Katrina and Rita, one problem for our business owners in 
the gulf was that their customer bases were dispersed around the 
country by the storms and were slow to return. Without this revenue 
from their customers, many businesses struggled to make ends meet and 
relied upon U.S. Small Business Administration, SBA, disaster loans, 
insurance payouts, and in some cases, State-administered bridge loan 
funding to keep going.
  We also have businesses that export goods and services to foreign 
countries. The 2,000 exporters in Louisiana, in addition to the other 
help available, were also able to rely on their international partners 
to stay in business. Their international customers showed great faith 
and commitment to our exporters by placing new orders after the storms.
  I am introducing the Small Business International Trade Enhancements 
Act of 2006 to give all small businesses the opportunity to expand 
their operations into international markets. I am pleased to have 
Senator Kerry, the ranking member of the Senate Small Business 
Committee, as well as Senators Pryor and Bayh, as cosponsors.
  As I mentioned we have 2,000 exporters in Louisiana. However, there 
are many other businesses who are exporters, but they do not even 
realize it. They may have overseas Internet sales, or they focus 
operations on domestic sales, but have some international buyers as 
well. In fact, the Small Business Administration has stated that over 
96 percent of all exporters of goods and services are small businesses.
  Given the importance of these exporters to my State and to the rest 
of the gulf coast, I would like to improve their competitive edge in 
the international market and give them every resource they need to 
succeed. As they continue to recover, one of the main issues being 
faced by our small business is accessing capital. Our exporters are no 
different. They need help accessing export financing to cover export-
related costs such as purchasing equipment, purchasing inventory, or 
financing production costs.
  To help our small businesses access export financing, my legislation 
will create a gulf coast international finance specialist within SBA 
located in New Orleans to focus on the needs of businesses affected by 
Katrina and Rita. New Orleans had a finance specialist from 1998 until 
mid-2003, when that individual retired from the agency. SBA left the 
post vacant due to lack of funding. I believe it is important to locate 
this finance specialist in New Orleans because that is where the 
majority of Louisiana's exporters and export financing institutions are 
located. In New Orleans, this finance specialist also is in a prime 
location, within easy travel distance to the gulf coast sections of 
Mississippi and Alabama--where a majority of the exporters and export 
financing institutions in these States are located as well.
  Fifteen SBA finance specialists operate out of 100 U.S. export 
assistance centers administered by the Department of Commerce around 
the country. That is a record staffing low for this program, down from 
a peak of 22 finance specialists in 2000. To ensure that all smaller 
exporters nationwide will continue to have access to export financing, 
this bill establishes a floor of 16 international finance specialists. 
I believe this will send a signal to our exporters that, despite 
current budget deficits, we are committed to our exporters and want to 
provide them with the necessary resources to compete internationally.
  Mr. President, I realize that the need for export financing is not 
just limited to the gulf coast. There are small businesses nationwide 
that are looking to find markets overseas. One tool that they can use 
is the SBA's international trade loan, ITL, program. International 
trade loans can help exporters develop and expand overseas markets; 
upgrade equipment or facilities; and assist exporters that are being 
hurt by import competition. Exporters can borrow up to $2 million, with 
$1,750,000 guaranteed by SBA.
  However, as currently structured these loans are not user-friendly to 
lenders or borrowers and, as a result, are underutilized. Let me 
explain what I mean. First, the $250,000 difference between the loan 
cap and the guarantee requires borrowers to take out a second SBA loan 
to take full advantage of the $2 million guarantee. ITLs can only be 
used to acquire fixed assets and not working capital, a common need for 
exporters. Furthermore, ITLs do not have the same collateral or 
refinancing requirements as SBA 7(a) loans. Because of these issues, 
lenders do not use these loans.
  My legislation will reduce the paperwork by increasing the maximum 
loan guarantee to $2,750,000 and the loan cap to $3,670,000 to bring it 
more in line with the 7(a) program. This bill also creates a more 
flexible ITL by setting out that working capital is an eligible use for 
loan proceeds, in addition to making the ITL consistent with regular 
7(a) loans by allowing the same collateral and refinancing terms as 
with 7(a).
  The SBA international trade and export loans are valuable tools for 
exporters but they are useless if there is no one to assist borrowers 
with identifying which loans are right for them. Local lending 
institutions that specialize in export financing can help but at a cost 
over less than $2 million per year, the current group of finance 
specialists has obtained bank financing for more than $10 billion in 
U.S. exports since 1999. The $10 billion in export sales financed by 
these specialists helped to create over 140,000 new, high-paying U.S. 
jobs.
  The Small Business International Trade Enhancements Act of 2006 is an

[[Page S7556]]

important first step, not just for exporters in the gulf coast, but 
also for small businesses nationwide who are looking to open markets 
overseas. I urge my colleagues to support this legislation since it 
will help our exporters in the gulf coast recover and also give small 
businesses nationwide more options when they are seeking export 
financing.
  I thank the Chair and ask unanimous consent that a copy of the bill 
be printed in the Record, along with the accompanying material.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3663

       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 ``Small Business International 
     Trade Enhancements Act of 2006''.

     SEC. 2. DEFINITIONS.

       In this Act, the terms ``Administration'' and 
     ``Administrator'' mean the Small Business Administration and 
     the Administrator thereof, respectively.

     SEC. 3. INTERNATIONAL TRADE LOANS.

       (a) In General.--Section 7(a)(3)(B) of the Small Business 
     Act (15 U.S.C. 636(a)(3)(B)) is amended by striking 
     ``$1,750,000, of which not more than $1,250,000'' and 
     inserting ``$2,750,000 (or if the gross loan amount would 
     exceed $3,670,000), of which not more than $2,000,000''.
       (b) Working Capital.--Section 7(a)(16)(A) of the Small 
     Business Act (15 U.S.C. 636(a)(16)(A)) is amended--
       (1) in the matter preceding clause (i), by striking ``in--
     '' and inserting ``--'';
       (2) in clause (i)--
       (A) by inserting ``in'' after ``(i)''; and
       (B) by striking ``or'' at the end;
       (3) in clause (ii)--
       (A) by inserting ``in'' after ``(ii)''; and
       (B) by striking the period and inserting ``; or''; and
       (4) by adding at the end the following:
       ``(iii) by providing working capital.''.
       (c) Collateral.--Section 7(a)(16)(B) of the Small Business 
     Act (15 U.S.C. 636(a)(16)(B)) is amended--
       (1) by striking ``Each loan'' and inserting the following:
       ``(i) In general.--Except as provided in clause (ii), each 
     loan''; and
       (2) by adding at the end the following:
       ``(ii) Exception.--A loan under this paragraph may be 
     secured by a second lien position on the property or 
     equipment financed by the loan or on other assets of the 
     small business concern, if the Administrator determines such 
     lien provides adequate assurance of the payment of such 
     loan.''.
       (d) Refinancing.--Section 7(a)(16)(A)(ii) of the Small 
     Business Act (15 U.S.C. 636(a)(16)(A)(ii)) is amended by 
     inserting ``, including any debt that qualifies for 
     refinancing under any other provision of this subsection'' 
     before the period.

     SEC. 4. GULF COAST EXPORT ASSISTANCE.

       (a) Increase in Small Business International Trade Staff.--
     The Administrator shall assign 1 additional full-time 
     international finance specialist to the Office of 
     International Trade of the Administration.
       (b) Location and Service Area.--The international finance 
     specialist assigned under subsection (a) shall--
       (1) be located in the New Orleans, Louisiana United States 
     Export Assistance Center;
       (2) help to carry out the export promotion efforts 
     described in section 22 of the Small Business Act (15 U.S.C. 
     649); and
       (3) provide such services in the States of Louisiana, 
     Mississippi, and Alabama.
       (c) Authorization of Appropriations.--
       (1) In general.--There are authorized to be appropriated to 
     the Administration such sums as are necessary to carry out 
     this section.
       (2) Availability of funds.--Amounts made available under 
     this subsection shall remain available until expended.

     SEC. 5. ASSIGNMENT OF EMPLOYEES OF THE OFFICE OF 
                   INTERNATIONAL TRADE.

       Section 22 of the Small Business Act (15 U.S.C. 649) is 
     amended by adding at the end the following:
       ``(h) In carrying out this section, the Administrator shall 
     ensure that the number of full-time equivalent employees of 
     the Office assigned to the one-stop shops referred to in 
     section 2301(b) of the Omnibus Trade and Competitiveness Act 
     of 1988 (15 U.S.C. 4721(b)) is not less than the number of 
     such employees so assigned on January 1, 2006.''.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

      Small Business International Trade Enhancements Act of 2006

       Exports and international trade are important to the U.S. 
     economy and will be key to the long-term recovery of the Gulf 
     Coast. To take advantage of increased demand for products 
     from the Gulf Coast, particularly Louisiana and Mississippi, 
     small businesses in the Gulf require access to export 
     financing through the Export-Import Bank, the U.S. Small 
     Business Administration (SBA), and in some cases, the U.S. 
     Department of Agriculture.
       The SBA employs International Finance Specialists which 
     work with borrowers and lenders to navigate the various 
     Federal government export financing programs.
       Problem #1: Gulf Coast Export Financing Needs. Despite the 
     increased need for export financing in the Gulf Coast, there 
     is currently no International Finance Specialist located in 
     any of the hardest hit states of Mississippi, Alabama and 
     Louisiana. Instead there is one specialist in Texas with 
     responsibility for Texas, Oklahoma, Arkansas and Louisiana 
     and one specialist in Georgia responsible for Georgia, 
     Alabama, Kentucky, Tennessee, and Mississippi. Due to the 
     extensive territories they cover and limited travel budgets 
     of the staff, these specialists must divide their time and 
     cannot focus on the needs of Gulf Coast small businesses.
       It is essential to have a Finance Specialist located on the 
     Gulf Coast with a responsibility for the Gulf Coast.
       Problem #2: Staff Reductions for SBA International Finance 
     Specialists. At a cost of less than $2 million per year, the 
     current group of Finance Specialists has obtained bank 
     financing for more than $10 billion in U.S. exports since 
     1999. The $10 billion in export sales financed by these 
     specialists helped to create over 140,000 new, high-paying 
     U.S. jobs. Despite these figures, this program is 
     experiencing record staffing lows.
       In particular, there are over 100 U.S. Export Assistance 
     Centers nationwide, however as of July 10, 2006 there were 
     only 15 Finance Specialists nationwide. This figure is the 
     lowest staff levels ever for the program and is down from a 
     peak of 22 Finance Specialists in January 2000.
       Problem #3: International Trade Loan Program. The SBA's 
     International Trade Loan (ITL) program is used by exporters 
     to expand or develop markets, upgrade equipment or facilities 
     to improve competitive position, or to assist exporters 
     currently hurt by import competition. As currently 
     structured, however, ITLs are not user friendly or relevant. 
     This is because, with a maximum guarantee amount of $1.75 
     million and loan cap of $2 million, ITLs require the SBA to 
     make a second loan to the borrower to make use of the maximum 
     guarantee. These loans are also restricted for use for only 
     fixed assets and not working capital, which is a common need 
     for exporters.
       The Landrieu Small Business International Trade 
     Enhancements Act of 2006 addresses these problems:
       Gulf Coast International Finance Specialist: To help our 
     small businesses access export financing, this bill provides 
     for an International Finance Specialist in the New Orleans 
     who would be responsible for Louisiana, Mississippi, and 
     Alabama.
       International Trade Loans: To make this loan program more 
     responsive, this bill increases the maximum loan guarantee 
     amount to $2.75 million and specifies that the loan cap for 
     ITLs is $3.67 million, as well as sets out that working 
     capital is an eligible use for loan proceeds.The bill also 
     makes ITLs consistent with regular SBA 7(a) loans in terms of 
     allowing the same collateral and refinancing terms as with 
     regular 7(a) loans.
       Stop International Finance Specialist Downsizing: To ensure 
     that all smaller exporters nationwide will continue to have 
     access to export financing, this bill establishes a floor of 
     16 International Finance Specialists.
                                 ______