Export Promotion: Export-Import Bank Has Met Target for Small
Business Financing Share (17-JAN-08, GAO-08-419T).
The Export-Import Bank (Ex-Im) provides loans, loan guarantees,
and insurance to support U.S. exports. Its level of support for
small business has been a long-standing issue of congressional
interest. In 2002, Congress increased the proportion of financing
Ex-Im must make available for small business to 20 percent. In
2006, Congress directed Ex-Im to make organizational changes
related to small business and to better evaluate its small
business efforts. This statement discusses (1) trends in Ex-Im's
small business financing since fiscal year 2000 and (2) the
weaknesses GAO found in the tracking and reporting of Ex-Im's
small business financing and the steps Ex-Im has taken to address
them. This testimony is based primarily on GAO's March 2006
report (GAO-06-351) concerning Ex-Im's small business program. In
that report, we recommended that Ex-Im (1) improve the data it
maintains on its customers with regard to their small business
status; (2) improve its system for estimating the value and
proportion of direct small business support for those
transactions where the exporter is not known at the time of
authorization; (3) more accurately determine and clearly report
the number of transactions that directly benefit small business;
and (4) have its auditor audit Ex-Im's reporting of its direct
support for small business. Ex-Im agreed with three of the four
recommendations. We discuss the actions Ex-Im has taken to
implement our suggestions in this statement.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-419T
ACCNO: A79889
TITLE: Export Promotion: Export-Import Bank Has Met Target for
Small Business Financing Share
DATE: 01/17/2008
SUBJECT: Bank loans
Banking law
Data integrity
Exporting
Financial management
Internal controls
Off-budget federal entities
Reporting requirements
Small business
Small business assistance
Statistical data
Statutory law
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GAO-08-419T
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Testimony:
Before the Small Business Committee, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EST:
Thursday, January 17, 2008:
Export Promotion:
Export-Import Bank Has Met Target for Small Business Financing Share:
Statement of Loren Yager, Director:
International Affairs and Trade:
Ex-Im Small Business:
GAO-08-419T:
GAO Highlights:
Highlights of GAO-08-419T, a testimony to the Committee on Small
Business, House of Representatives.
Why GAO Did This Study:
The Export-Import Bank (Ex-Im) provides loans, loan guarantees, and
insurance to support U.S. exports. Its level of support for small
business has been a long-standing issue of congressional interest. In
2002, Congress increased the proportion of financing Ex-Im must make
available for small business to 20 percent. In 2006, Congress directed
Ex-Im to make organizational changes related to small business and to
better evaluate its small business efforts.
Figure: Ex-Im's Reported Proportion of Financing Directly Benefiting
Small Business, Fiscal Years 2000-2007:
This figure is a line graph showing Ex-Im's reported proportion of
financing directly benefiting small business between fiscal years 2000
and 2007. The X axis represents the fiscal year, and the Y axis
represents the percentage.
[See PDF for image]
Source: GAO analysis of Ex-Im data.
[End of figure]
This statement discusses (1) trends in Ex-Im�s small business financing
since fiscal year 2000 and (2) the weaknesses GAO found in the tracking
and reporting of Ex-Im�s small business financing and the steps Ex-Im
has taken to address them. This testimony is based primarily on GAO�s
March 2006 report (GAO-06-351) concerning Ex-Im�s small business
program. In that report, we recommended that Ex-Im (1) improve the data
it maintains on its customers with regard to their small business
status; (2) improve its system for estimating the value and proportion
of direct small business support for those transactions where the
exporter is not known at the time of authorization; (3) more accurately
determine and clearly report the number of transactions that directly
benefit small business; and (4) have its auditor audit Ex-Im�s
reporting of its direct support for small business. Ex-Im agreed with
three of the four recommendations. We discuss the actions Ex-Im has
taken to implement our suggestions in this statement.
What GAO Found:
The share of Ex-Im financing directly benefiting small business has
increased over recent years, surpassing the required 20 percent in 2006
and 2007. The percentage increase reflects a slow increase in Ex-Im
financing for small businesses, while financing for non-small
businesses was noticeably lower in 2006 and 2007 compared to 2005. Ex-
Im continues to finance most small business transactions through
insurance or working capital guarantees.
In our 2006 report, we found weaknesses in Ex-Im�s data and data
systems for tracking small business financing and made recommendations
for improvement, and Ex-Im has taken steps to address those weaknesses.
We reported that while Ex-Im generally classified companies� small
business status correctly, weaknesses limited its ability to accurately
determine small business financing values. For transactions where Ex-Im
can identify the exporter at the time it authorizes the transaction, we
found that internal control weaknesses in Ex-Im�s data systems limited
its ability to accurately determine small business financing amounts
and share. For transactions where Ex-Im cannot identify the exporter up-
front, we found that weaknesses in its system for estimating small
business financing also limited its ability to accurately measure and
report on such financing. We also reported some limitations in Ex-Im�s
calculation of the number--as opposed to the value�of transactions
benefiting small business. GAO made four recommendations. Ex-Im has
taken several steps in response to those recommendations. Most notably,
Ex-Im replaced its previous data systems with �Ex-Im Online,� an
interactive, web-based process that allows exporters, brokers, and
financial institutions to transact with Ex-Im electronically. According
to Ex-Im, this has resulted in more timely and accurate information on
Ex-Im�s financing.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-08-419T]. For more information, contact
Loren Yager at (202) 512-4347 or [email protected]
[End of section]
Madam Chairwoman, Ranking Member, and Members of the Committee:
I am pleased to be here today to discuss the Export-Import Bank of the
United States' (Ex-Im) small business program. I appreciate the
opportunity to provide some insights from GAO's work on this issue. As
you know, since the early 1980s when Congress first directed Ex-Im to
make available a specified percentage of its export financing for small
businesses, there has been considerable interest in Ex-Im's support for
small business. Initially, Congress directed Ex-Im to make 10 percent
of its financing authority available to small businesses, but increased
the requirement to 20 percent in the 2002 reauthorization of the bank's
charter. While Congress did not change the percent required in the 2006
reauthorization of Ex-Im, it did direct the bank to make organizational
changes related to its small business financing, and to better evaluate
its small business efforts.
As requested, today, I will discuss (1) trends in Ex-Im's small
business financing since fiscal year 2000 and (2) the weaknesses GAO
found in the tracking and reporting of Ex-Im's small business financing
and steps Ex-Im has taken to address them.
My remarks are based primarily on a report that GAO published in
2006,[Footnote 1] done at the request of this committee, and analysis
we conducted to update selected information and follow up on our
recommendations. For the 2006 report, we analyzed data on Ex-Im
transactions, examined Ex-Im documentation regarding its small business
calculations, and interviewed knowledgeable staff.[Footnote 2] The work
for this statement was conducted in accordance with generally accepted
government auditing standards.
I would also note that GAO has work underway that should be of
particular interest to this committee. Ex-Im's 2006 reauthorization
legislation requires Ex-Im to develop--and GAO to assess--performance
standards related to its small business program, including financing
for businesses owned by disadvantaged individuals and women. GAO is
specifically addressing the following questions: (1) What performance
standards has Ex-Im developed? (2) How well do they meet established
criteria such as tracking progress and providing managers needed
information to make decisions regarding assistance under the mandate?
and (3) What steps has Ex-Im taken to implement these standards? We
look forward to working with the officials at Ex-Im to complete this
work, and to reporting our findings to Congress later this year.
Summary:
The share of Ex-Im financing directly benefiting small business has
increased over recent years, surpassing the required 20 percent in 2006
and 2007. The percentage increase reflects a slow increase in Ex-Im
financing for small businesses. Financing for non-small businesses was
noticeably lower in 2006 and 2007 compared to 2005. Ex-Im continues to
finance most small business transactions through insurance or working
capital guarantees.
In our 2006 report, we found weaknesses in Ex-Im's data and data
systems for tracking small business financing and made recommendations
for improvement, and Ex-Im has taken steps to address those weaknesses.
We reported that, while Ex-Im generally classified companies' small
business status correctly, weaknesses in its data and data systems
limited Ex-Im's ability to accurately determine small business
financing amounts and share. Ex-Im calculates its small business
financing amounts by recording the financing value when the exporter
can be identified at the time of authorization and by estimating the
financing value when the exporter cannot be identified at
authorization. For transactions where the exporter can be identified at
authorization, we found that internal control weaknesses in Ex-Im's
data systems affected the reliability of Ex-Im's reported small
business financing value. For transactions where the exporter cannot be
identified at authorization, we found that weaknesses in Ex-Im's system
for estimating small business financing also limited Ex-Im's ability to
accurately measure and report on the amount of small business
financing. We also reported some limitations in Ex-Im's calculation of
the number--as opposed to the value--of transactions benefiting small
business. GAO made four recommendations. Ex-Im has taken several steps
in response to those recommendations. Most notably, Ex-Im replaced its
previous data systems with "Ex-Im Online," an interactive, web-based
process that allows exporters, brokers, and financial institutions to
transact with Ex-Im electronically. According to Ex-Im, this has
resulted in more timely and accurate information on Ex-Im's financing.
Background:
Established in 1934, Ex-Im operates as an independent agency of the
U.S. government and is the official export credit agency of the United
States. In 1983, Congress required Ex-Im to make available for fiscal
year 1986 and thereafter not less than 10 percent of its aggregate
loan, guarantee, and insurance authority for financing exports by small
businesses.[Footnote 3] In 2002, Congress established several new
requirements for Ex-Im relating to small business, including increasing
from 10 to 20 percent the proportion of Ex-Im's aggregate loan,
guarantee, and insurance authority that must be made available for the
direct benefit of small businesses.[Footnote 4] When reauthorizing the
bank's charter in 2006, Congress again established new requirements for
Ex-Im, including a small business division with an office of financing
for socially and economically disadvantaged small business concerns and
small business concerns owned by women, designating small business
specialists in all divisions, creating a small business committee to
advise the bank president, and defining standards to measure the bank's
success in financing small business. Ex-Im has taken steps to meet
these requirements.
Ex-Im uses the Small Business Administration methodology to determine
whether a company qualifies as a small business.[Footnote 5] To apply
this methodology, Ex-Im obtains company information through its
application process. Ex-Im also subscribes to Dun and Bradstreet, a
commercial information vendor, which provides information about
companies, including Standard Industrial Classification (SIC) codes. Ex-
Im uses the SIC codes provided by Dun and Bradstreet to determine a
company's small business standing by obtaining the corresponding North
American Industry Classification System (NAICS) code through the Small
Business Administration website.
Ex-Im offers a variety of financing instruments, including loan
guarantees,[Footnote 6] export credit insurance, and working capital
guarantees.[Footnote 7] Ex-Im provides its insurance either directly to
exporters (non-bank-held insurance) or to banks which in turn finance
U.S. exporters (bank-held insurance). For the bank-held insurance
policies, Ex-Im authorizes the policy for the bank, which does not know
at the time it applies for the financing which exporters will
eventually use the export credit insurance.
Trends in Ex-Im's Small Business Financing:
Between fiscal years 2002 and 2007, Ex-Im increased the percentage of
its financing for small businesses and continued to finance most small
business transactions through insurance or working capital guarantees.
Ex-Im Small Business Financing Share Has Recently Exceeded 20 Percent:
Ex-Im met the Congressional requirement to make available not less than
20 percent of its financing authority for small businesses in 2006 and
2007. In fiscal year 2006, Ex-Im's small business financing was 26.2
percent of its total financing and in fiscal year 2007 it increased to
26.7 percent. In fiscal years 2002 through 2005, Ex-Im did not reach
the goal, with its small business financing share ranging from 16.9
percent to 19.7 percent. (See fig. 1.)
Figure 1: Ex-Im's Reported Proportion of Financing Directly Benefiting
Small Business, Fiscal Years 2000-2007:
This figure is a line graph showing Ex-Im's reported proportion of
financing directly benefiting small business between fiscal years 2000
and 2007. The X axis represents the fiscal year, and the Y axis
represents the percentage.
[See PDF for image]
Source: GAO analysis of Ex-Im data.
[End of figure]
The percent of Ex-Im financing directly benefiting small business
depends on the value of small business financing compared to the value
of non-small business financing. (See fig. 2.) While the small business
financing value slowly increased between fiscal years 2001 and 2007,
the value for non-small business financing was noticeably lower in 2006
and 2007, compared to 2005.
Figure 2: Comparison of Ex-Im Small Business and Non-Small Business
Financing, Fiscal Years 2000-2007:
This figure is a combination line graph showing the comparison of Ex-Im
small business and non-small business financing between 2000-2007. The
X axis represents the year, and the Y axis represents U.S. dollars in
billions. The lines create shaded sections. The lowest is the total
authority directly supporting small business. The next is total
authority supporting non-small business. The top line represents total
authorized loans, guarantees, and insurance.
[See PDF for image]
Source: GAO analysis of Ex Im Bank data.
[End of figure]
Ex-Im Finances Most of Its Small Business Transactions through
Insurance or Working Capital Guarantees:
Ex-Im has primarily used three types of tools to finance small business
transactions: non-bank-held insurance, working capital guarantees, and
bank-held insurance (see fig. 3). In 2007, each tool was used to
finance about 30 percent of the $3.4 billion Ex-Im made available for
small business transactions. The remaining 8 percent of small business
financing was through medium-and long-term loans and guarantees. This
pattern contrasts with non-small business financing, where the largest
share is through medium-and long-term loans and guarantees.
Figure 3: Ex-Im's Reported Amount of Fiscal Year 2007 Transactions by
Finance Instrument.
This figure is a bar graph showing Ex-Im's reported amount of fiscal
year 2007 transactions by finance instrument. The X axis represents
dollars in billions, and the Y axis represents the types of
transactions.
[See PDF for image]
Source: GAO analysis of Ex Im Bank data.
[End of figure]
Ex-Im's use of bank-held insurance has posed some challenges for
accurately calculating the small business financing share, in part
because Ex-Im does not know who the exporter will be prior to
authorizing the bank-held insurance transaction and therefore cannot
make a small-business designation at that time. For bank-held insurance
and credit guarantee facilities, Ex-Im estimates the share of the
financing benefiting small business based on data regarding previous
shipments under those types of transactions.[Footnote 8] These
estimates of the small business share of authorized transactions can
differ significantly from the small business amounts actually shipped
under the authorizations. For example, in 2005 Ex-Im authorized a $10
million short-term insurance policy under which no shipments had been
reported prior to our March 2006 report. In contrast, in 2005 Ex-Im
also authorized a $50 million short-term insurance policy where
shipments under the policy exceeded $87 million for a 6-month period
(or $174 million on an annualized basis).
Weaknesses Limited Ex-Im's Ability to Measure Small Business Financing;
Ex-Im Has Implemented Improvements:
In our 2006 report, we found weaknesses in Ex-Im's data and data
systems for tracking small business financing and made recommendations
for improvement, and Ex-Im has taken steps to address those weaknesses.
We reported that, while Ex-Im generally classified companies' small
business status correctly, weaknesses in its data and data systems
limited its ability to accurately determine its small business
financing amounts and share. In implementing "Ex-Im Online" and certain
internal control measures, Ex-Im has improved its ability to accurately
measure small business financing.
Ex-Im Generally Classified Companies' Small Business Status Correctly:
Based on our review of independent data and Ex-Im's paper transaction
files, GAO reported in 2006 that Ex-Im's classification of companies'
small business status was generally correct. From our review of Ex-Im's
electronic databases and Dun and Bradstreet data on companies' sales
and employment, we estimated that, 83 percent of the time, Ex-Im's
small business designation[Footnote 9] matched the designation based on
Dun and Bradstreet data. Based on a review of Ex-Im's official paper
transaction files in instances where Ex-Im and Dun and Bradstreet's
designations differed, we determined that Ex-Im's designation was
justified in most instances.[Footnote 10]
Weaknesses Existed in Ex-Im's Process for Calculating Its Small
Business Financing:
In our 2006 report, we identified weaknesses in Ex-Im's process for
calculating its small business financing and made some corresponding
recommendations for improvement. The weaknesses ranged from internal
control weaknesses that may affect only a few transactions a year to
more significant weaknesses in Ex-Im's system for estimating about one-
third of its small business support.
Internal Control Weaknesses Existed in Ex-Im's Data Systems Used to
Measure Small Business Financing:
We reported two internal control weaknesses in Ex-Im data
systems[Footnote 11] used to calculate and report on Ex-Im's small
business financing; by implementing its interactive database, Ex-Im
Online, the bank has largely addressed those weaknesses.
First, we found that Ex-Im's electronic data systems used to calculate
its small business support did not contain complete or up-to-date
information on companies' small business status. As a result, to obtain
the most current information for these companies, Ex-Im officials
needed to identify and locate paper transaction files. While Ex-Im's
paper files generally supported its small business designation, we
found a significant number of discrepancies between Ex-Im's paper and
electronic files.
Second, we found that Ex-Im's data systems sometimes contained
conflicting information for the same company. Ex-Im maintained
information about insurance transactions and participants in one data
system and information about loans and guarantee transactions and
participants in another data system. According to Ex-Im, updating
information in a company's record (including its small business
designation) in one database did not update the company's record in the
other database. As a result, the two databases could, and in some cases
did, have conflicting information about the same company.
GAO recommended that Ex-Im improve the completeness, accuracy, and
consistency of its transaction data. Since the issuance of the GAO
report, Ex-Im Bank has implemented a number of controls to enhance and
reinforce the bank's methodology for capturing relevant information for
reporting small business statistics. Most notably, Ex-Im replaced its
previous data systems with Ex-Im Online, an interactive, web-based
process that allows exporters, brokers, and financial institutions to
transact with Ex-Im electronically. According to Ex-Im, more than
seventy-five percent of all applications are now submitted online,
omitting the need to transfer information from paper copies to the
bank's electronic files. Ex-Im officials stated that Ex-Im Online also
includes a direct feed from Dun and Bradstreet, which provides current
demographic information about a company so that Ex-Im can make an
accurate assessment of the company's small business status. In addition
to initiating Ex-Im Online, Ex-Im changed its internal procedures to
require documented dual signoff on the small business determination for
each transaction.[Footnote 12]
Weaknesses Existed in Ex-Im's System for Estimating Small Business
Financing When the Exporter Is Not Immediately Knowable:
We reported two weaknesses in Ex-Im's system for estimating small
business financing when the exporter is not known at the time Ex-Im
authorizes the transaction, which applied to about one-third of Ex-Im's
total small business financing for fiscal year 2004. First, we found
that Ex-Im's estimates might not accurately reflect the amount of small
business financing under bank-held insurance policies because of large
differences between the amount of financing authorized and the amount
of financing used to actually ship goods. For both fiscal years 2004
and 2005, the value of shipments under bank-held insurance policies was
a fraction of the total authorized value of the bank-held insurance
policies. For example, according to Ex-Im records, it authorized $3.4
billion of bank-held insurance transactions for fiscal year 2004, but
there were only $280 million in shipments under bank-held insurance
policies in the first 6 months of the fiscal year. Ex-Im applied its
estimate of the small business share of transactions, based on these
shipments, to the $3.4 billion of bank-held insurance policies it
authorized during the year, and determined that about $720 million of
the authorized value of bank-held insurance policies during the year
directly benefited small business. Thus, the method resulted in
estimates of small business shares for the authorized value of these
types of transactions based on a very small share (about 8 percent) of
the total authorized value.
Also, we found that Ex-Im classified the small business status of a
significant portion of the companies making shipments as "unknown" and
excluded them from its calculation of the estimate of its small
business support. Of the $280 million of shipments under bank-held
insurance for 2004, for example, an Ex-Im official classified about
$128 million (or nearly half) as shipments by companies whose small
business status was "unknown" and excluded these shipments from its
calculation of total shipments.
GAO recommended that Ex-Im improve its system for estimating the value
and proportion of direct small business support for those transactions
where the exporter is not known at the time Ex-Im authorizes the
transaction. According to Ex-Im, its implementation of Ex-Im Online
improves these estimates because borrowers can now enter their shipment
reports directly into Ex-Im Online. According to Ex-Im, two-thirds are
being entered in this manner. Ex-Im officials stated that such
automated submission of shipment information has significantly reduced
the amount of shipments by exporters whose small business status is
unknown. They stated that only 3 percent of the fiscal year 2007
shipments under bank-held insurance were by exporters whose small
business status was unknown. They also stated that, for credit
guarantee facilities, no shipments were recorded by exporters whose
small business status was unknown.
GAO also recommended that Ex-Im engage an external auditor to audit its
annual, legislatively mandated report on its direct support for small
business. Ex-Im engaged Mayer Hoffman McCann P.C., its internal
auditor, to perform the audit. With respect to credit guarantee
facilities, bank-held policies, and non-bank-held insurance (i.e.,
single buyer/multi-buyer) policies, the auditors found that Ex-Im's
process to obtain and calculate eligible small business counts operates
in accordance with its policy and approved methodology. However, the
auditors found exceptions to stated policy during their review of the
working capital guarantee and non-credit guarantee facilities programs.
For example, in the working capital guarantee program, the auditors
noted a number of exceptions related to the completion of data fields
that would have "flagged" these accounts as small business. The
auditors stated that they believed that Ex-Im management was taking
action to strengthen supervisory edit controls over these processes.
Ex-Im's Reporting on the Number of Transactions Directly Benefiting
Small Business:
Ex-Im is statutorily required to report on the number of its authorized
transactions that directly benefit small business; in our 2006 report
we found that Ex-Im's method of determining this number included some
transactions that did not directly benefit small business. Ex-Im has
frequently reported that about 85 percent of its authorized
transactions directly benefit small business. For instance, in fiscal
year 2004, it reported that 2,572 (or 83 percent) of its authorized
transactions directly supported small businesses. This count was based
on crediting all 698 bank-held insurance policies as directly
benefiting small business.[Footnote 13] We reported that while many of
these transactions directly benefit small business, they may not all
directly benefit small business, as evidenced by the fact that Ex-Im's
own estimate showed that about 20 percent of the value of bank-held
insurance policies directly benefited small business during 2004.
GAO recommended that Ex-Im more accurately determine and clearly report
the number of transactions that directly benefit small business;
however Ex-Im officials disagreed with this recommendation and have not
changed their methodology. Ex-Im officials stated that they reviewed
their process and believe that it is appropriate. A senior official
also noted that since the methodology has been used for a number of
years, the bank can confidently report trends. The bank also believes
that their methodology provides a conservative estimate.
Conclusions:
Since GAO's last report on small business financing in March 2006, Ex-
Im has made a number of changes. It also surpassed the target of
allocating 20 percent of its financing to small business for both 2006
and 2007. While this is partly due to a drop in the overall level of
financing provided to other customers by the bank, Ex-Im has shown
increases in the level of business with small firms over several years.
In addition, Ex-Im has made changes in its data systems which allow
Congress to have a greater level of confidence in its reporting on
small business and other matters, and it has instituted new internal
controls to further increase accuracy in categorizing firms' small
business status. Managing its resources going forward to respond to
ongoing Congressional interest in the composition of Ex-Im's financing
will, undoubtedly, entail new challenges for the bank. We look forward
to working with Ex-Im further on issues related to evaluation of its
small business financing efforts, including those directed at
businesses owned by disadvantaged individuals and minorities, as
mandated by the Congress with the strong support of this Committee.
Madam Chairwoman, this concludes my prepared remarks. I would be
pleased to respond to any questions you or other members of the
committee may have at this time.
Contacts and Acknowledgments:
Should you have any questions about this testimony, please contact
Loren Yager at (202) 512-4347 or [email protected]. Celia Thomas, Miriam
A. Carroll and Jason Bair also made major contributions to this
testimony.
[End of section]
Footnotes:
[1] GAO, Export-Import Bank: Changes Would Improve the Reliability of
Reporting on Small Business Financing, GAO-06-351 (Washington, D.C.:
March 3, 2006)
[2] That report also described Ex-Im's interpretation of its
obligations under the 20 percent small business mandate.
[3] Pub. L. No. 98-181. The law provided for this percentage to
increase from 6 percent in fiscal year 1984 to 10 percent in 1986 and
thereafter.
[4] Pub. L. No. 107-189.
[5] The Small Business Administration uses "size standards" to identify
the largest a company can be and still qualify as a small business.
Small Business Administration's size standards vary by industry, as
defined by the North American Industry Classification System, which
replaced the Standard Industrial Classification system, and are
typically expressed in either millions of dollars or number of
employees, reflecting average annual receipts or average employment of
a firm.
[6] One type of loan guarantee is a credit guarantee facility, a line
of credit between a bank or corporation in the United States and a
foreign bank (or occasionally a large foreign buyer). Ex-Im guarantees
the repayment of the foreign bank's obligations. The foreign bank then
makes credit available to the end user of the U.S. exports and takes
the repayment risk of the local company.
[7] Ex-Im also provides a small number of direct loans, which are
primarily used to offer concessionary financing to U.S. exporters to
match concessionary financing by other countries' export credit
agencies.
[8] To make these estimates, Ex-Im analyzes data on exports under each
type of transaction and determines whether each exporter is small, non-
small, or unknown by estimating the percentage of the value of
shipments. Ex-Im divides the value of shipments made by small business
exporters by the sum of the shipments by small and non-small business
exporters. (Shipments by companies of unknown size are excluded from
the calculation.) Ex-Im applies this percentage to the value of the
entire year's authorized transactions of this type, resulting in its
estimate of the value of direct support for small business from that
transaction type.
[9] The term "small business designation" refers to the decision
regarding whether or not a company qualifies as a small business.
[10] Our analysis showed that, where Ex-Im's small business designation
differed from the designation indicated by Dunn and Bradstreet data, Ex-
Im almost always identified a company that appears to qualify as a
small business as a non-small business.
[11] At the time of our analysis, three databases were relevant to Ex-
Im's small business financing calculation. Two databases stored
information on companies involved in the transactions, and a third
integrated information from these databases and performs the actual
calculation.
[12] In specific instances for short-term insurance transactions, only
one signature is required because signing authority has been delegated
to staff based on certain policy parameters.
[13] Similarly, in 2007, Ex-Im reported that that 2,390 (or 86 percent)
of its authorized transactions directly supported small businesses,
including five credit guarantee facilities and 374 bank-held insurance
policies.
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