[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.
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