Small Business Finance News
Small Businesses Fight To Retain Government Support For Export Financing
Written by Tim Morral
Big and small businesses are urging Congress to renew the U.S. Export-Import Banks' charter that expires on September 30. If it's not renewed, some say the effects could be detrimental for businesses.
The Export-Import Bank will have to discontinue business if its charter is not renewed on September 30 and Congress currently stands divided on the issue.
The bank is a credit agency that helps American companies finance and insure foreign purchases of exports made in the U.S. It was responsible for about $27 billion in business last year and is involved with about 2 percent of U.S. exports. In 2013, it provided $37.4 billion to support 205,000 export-dependent jobs.
"The Export-Import Bank is an essential tool in enabling American manufacturers to access and compete in foreign markets-supporting thousands of small businesses and more than 200,000 jobs across the country," said Nancy Pelosi, House Minority Leader. "Further, the Export-Import Bank is fiscally responsible by operating at no cost to the taxpayers, paying for itself out of the fees it collects."
According to bank's Chairman, Fred Hochberg, 23 to 24 percent of small businesses have been helped by the bank. "We're there when the private sector can't or won't," Hochberg said.
The leading opposition of the bank is Jeb Hensarling, head of the House Financial Services Committee, who said he wants to shut down the Bank because it's "a bad idea."
"In many respects, it's the face of cronyism," Hensarling said in a statement.
Hensarling believes the bank is mismanaged and provides subsidies to foreign companies that undercut U.S. businesses. He is backed by Tea Party groups, such as Club for Growth, Heritage Action and the Koch brothers.
The Bank is also accused of being guilty of corporate welfare because it provides benefits to Wall Street and giant corporations like Boeing, General Electric and Caterpillar, which are guaranteed loans below the market rate through the bank.
However, Senior Director of International Policy for the U.S. Chamber of Commerce Chris Wenk said that companies like Boeing are a part of a long business chain.
"What people lose sight of is, you are looking at a large company that makes airplanes for example, but there are thousands of suppliers that go into making that product," Wenk said.
Boeing-related sales have received the largest amount of money from the bank and about 90 percent of the transactions went to support exports by small businesses and their supply chains.
In small business banking, choosing the right lender and bank is crucial. As the future remains unclear for some banks, it's important to weigh your risks and rewards to continue to make the safest choice for your business and your future.
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