It may bruise the national ego that the Canadian loonie has pulled even with the U.S. dollar and the euro is trouncing the greenback, but there is a silver lining: America's relatively cheap exports are booming and have played a critical role keeping the U.S. economy out of recession. In the second quarter of 2008, the nation's GDP rose 1.9 percent thanks in large part to a 9.2-percent jump in exports.
In response, more and more small-business owners are looking to tap overseas markets. They realize exports are their biggest growth opportunity, and some banks are beginning to realize that opportunity includes them. "If they learn how to gain access to foreign markets, they're basically getting in front of more customers and they're going to be successful because they are very, very good [at what they do]; and if they keep growing, then we grow with them and we all benefit," says Victor Notaro, an svp at Pittsburgh-based PNC Bank.
In September, PNC planned to conduct seminars in four cities-Cincinnati, Philadelphia, Pittsburgh and East Brunswick, NJ-on how small businesses can best break into the Indian, South Korean and Vietnamese markets. The conferences will be in conjunction with the U.S. Commercial Services department, which is the trade promotion arm of the International Trade Administration, and global-shipping provider FedEx.
This is the second year that PNC has conducted such seminars. Last year more than 1,000 companies and 1,400 participants participated in a seminar on trade with China. "As [PNC's small business clients] grew and needed to do more things overseas, they didn't automatically think of PNC as a place to do that," says Notaro. "Sometimes you think of American banks as just being focused on the U.S. The reality was that we were able to meet all the international services needs of our corporate clients. So part of this was to educate them on all the things that we could do to meet all their goals and the second thing was that it was very good business for PNC."
There are 50,000 small- and medium-sized exporters in PNC's footprint, and 11,000 of those are clients of PNC, Notaro says. But even those non-client banks are proving a source of revenue. The $108-billion-asset bank offers its exporting products, services and solutions on a white label basis to other banks for their small business customers. Notaro says 40 banks use it services, 12 of which are major banks. "Many of the medium-sized and small banks in the United States that we do business with, our correspondent banks if you will, are really, really growing quickly with our global products," he says.
That growth of small business exporters may be just starting to accelerate. According to the U.S. Small Business Association, small firms account for 97 percent of all U.S. exporters and account for approximately 30 percent of the nation's export revenue. A report by the Institute for the Future and Intuit estimates that nearly half of small businesses in the U.S. will be involved in cross-boarder trade by 2018.
Like PNC, Buffalo-based M&T Bank provides seminars to small businesses and has partnered with the U.S. Department of Commerce over the last 18 months. M&T works with the Export-Import Bank of the United States and the SBA to guarantee 90 percent of the loans it makes to small business exporters, says Gerald Solomon, vp in the bank's international trade finance group.
The next round of seminars will be in October in Charlotte, Philadelphia and Gaithersburg, MD, and will look at exporting to India. "The most helpful thing a bank such as ours can do is making sure [the bank's client] gets paid," Solomon says. "I think too many people are under the impression that we'll send it over and they will pay us, but sometimes that doesn't happen."
In February, Wells Fargo extended its foreign exchange online service to small businesses as well as provided content on the public site that gives guidance to those interested in exporting, says Gregg Napoli, head of foreign exchange services at Wells. "What this means is that our business banking customers or smaller businesses have access to the same robust foreign exchange capabilities that our middle market and large corporate clients do," Napoli says. (c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved. http://www.americanbanker.com/usb.html/ http://www.sourcemedia.com/