By Sen. Olympia J. Snowe (R-Maine) - 07/22/09 02:50 PM EDT
Selling to foreign buyers has critical benefits for small businesses, including access to new and growing markets and a more diversified customer base that better positions small businesses to withstand fluctuations in their local economies. Assisting small businesses — the primary creators of new jobs — can also help lead our economy out of this devastating recession.
Many small businesses have realized the benefits of tapping into large and potentially lucrative international markets for goods and services. The number of small business exporters has more than tripled in the past two decades, rising to more than 260,000 today.
Despite this strong growth, exporting is not yet common among small businesses. In fact, less than 1 percent of all U.S. small businesses have any export sales. This is largely because small businesses face particular challenges to doing business overseas. Securing working capital can be an impediment because many banks do not lend against foreign purchase orders. Numerous small business owners cannot dedicate the necessary resources to explore export opportunities on their own.
I have introduced a comprehensive bill that would better enable small businesses to overcome these obstacles. This bill, S. 1208, helps small businesses in myriad ways, and I would like to emphasize a few. First, to encourage small businesses to actively seek foreign buyers, I propose creating a new export development grant program. Most small businesses begin exporting in response to international customer inquiry, not as a strategic decision. The first steps in building an export business can be expensive. Participating in a foreign trade mission or an international marketing trip, creating foreign language marketing materials, or even subscribing to the Department of Commerce’s valuable Gold Key Service all require investments that small business owners may not currently be able to afford.
Under my bill, the federal government will provide matching funds, up to $5,000, for expenses that a small business incurs while developing an export business. This program invests a total of $25 million per year to encourage and enable small businesses to seek export opportunities proactively. The return on our investment should be substantial. Every dollar spent on export promotion yields a $40 increase in exports, according to a recent World Bank study.
The bill expands counseling and support services. Although small business owners are experts in their business, frequently they do not know the steps necessary to start exporting — or to begin exporting to new markets. Small business export-assistance counselors are currently located in only 17 of more than 100 U.S. Export Assistance Centers, which the Department of Commerce maintains across the country. My bill more than doubles the number of export-assistance counselors, who provide valuable export guidance for small business owners. The bill also expands counseling provided by the nationwide network of Small Business Development Centers.
We also must ensure that small businesses are able to secure the financing required to sell goods and services internationally by updating federal export loan guarantees. My legislation does this by increasing maximum loan amounts up to $5 million and expanding the number of lenders that offer loans guaranteed by the U.S. Small Business Administration.
Finally, the concerns of small businesses must be central in the development of national trade policy. Since 2001, I have fought to create a new U.S. Trade Representative for Small Business in order to protect the interests of small businesses in trade negotiations and in the enforcement of U.S. trade rights under existing agreements. This is a critical step to ensure that challenges such as other countries’ trade barriers and intellectual property theft — both disproportionately burdensome to small businesses — are brought to the forefront of U.S. trade policy formulation.
Small businesses require this vital export assistance immediately. Export sales, which over the last 40 years have more than doubled as a percent of our gross domestic product, declined to $121 billion in May, down from $164 billion last July. Nonetheless, America’s small businesses can thrive in the face of international competition and continue to create the new jobs that our economy so desperately needs right now. It is in our greatest interest to help small businesses take advantage of those opportunities by increasing support and training resources, and improving export financing, and ensuring that small businesses are represented in the formation of trade policy.
Snowe is the ranking member of the Senate Committee on Small Business and Entrepreneurship.