The Small Business Administration is making a last-ditch attempt to drive up participation in Export Express, its export loan program for small businesses.
Export Express, which rapidly processes guarantees for loans as large as $250,000, remains in its pilot phase entering its 10th year. It has failed to keep pace with exporting by small businesses, which rose to $375 billion in fiscal 2006 from $300 billion in 2002, according to the SBA.
The SBA wants to increase the loan minimum to $350,000 and eliminate part of the application paperwork, said Richard Ginsburg, senior international trade specialist with the agency. Those changes must be approved by the SBA’s office of capital access.
The SBA is also developing a marketing strategy, including outreach to lenders, Mr. Ginsburg said. He said the changes should be in place some time before Sept. 30, when fiscal 2008 ends. Even if they went through close to the end of the fiscal year, the SBA would have enough time to judge whether the response is strong enough, he said.
“We think we are going to see a turnaround in the producers and users of this program, and we are excited about it,” Mr. Ginsburg said.
If the changes are effective, he said, the SBA will make the program permanent program. Otherwise it will be discontinued.
“We don’t anticipate extending the pilot,” he said. “We feel that by the end of the year, we’ll have enough information to make that decision.”
Export Express has approved 768 loans with nearly $100 million in volume over the past five years, Mr. Ginsburg said. The loans, which the SBA says are processed within 24 hours, are aimed at small exporters, particularly those needing revolving lines of credit. Export Express guarantees as much as 85% of each loan.
The reduced paperwork and the higher loan maximum would make Export Express more attractive, said Gerry Arteaga, senior vice president and head of global trade services, marketing, and advisory for the $59 billion-asset Bank of the West, a San Francisco unit of BNP Paribas of Paris.
But he said the main problem is that Export Express has been undermarketed.
“This is a valuable program, because in international business, time is everything,” he said. “But I don’t think SBA has promoted this program as it has some of its other programs.”
Mr. Arteaga said he was not aware of his bank’s having used the program at all. He said he knew little about Export Express’ features before looking into it after a reporter asked for his opinion of the program.
“I was quite impressed with its features and key benefits,” he said, adding that he is now interested in recommending Export Express to customers.
James Morrison, the president of the Small Business Exporters Association, agreed that poor marketing is largely to blame for Export Express’ lack of popularity.
The program is valuable because it lets borrowers get guaranteed loans much faster than through other avenues. But too often, SBA officials have presented it narrowly — as a way to pay for attending a trade show or to print brochures, Mr. Morrison said.
“I wonder whether companies feel like they want to bother with a bank loan for those things,” he said. The SBA has “almost undersold it that way.”
The guaranteed loans can be used for everything from participation in a foreign trade show to the purchase of real estate and equipment used to make goods for export.
Mr. Morrison said that not only are too few small businesses aware of Export Express, but too few have seized on the business of exporting, period.
“Of the 26 million small businesses in the U.S., only 6% or 7% export — versus 100% of the 1,000 biggest businesses,” he said.
A lot of the advocacy of the program must come from banks, Mr. Morrison said.
“Banks are the multipliers,” he said. “Small businesses go to banks all the time; they hardly ever go to the SBA.”
Mr. Arteaga agreed. “It’s our obligation to advise customers about these programs that are out there,” he said.
