Editor’s note: Debate has raged in the House in recent weeks over whether to renew the charter of the Export-Import Bank of the United States, which expires Sept. 30. The main hang-up is the bank’s support for multinationals, which many critics say amounts to corporate welfare. Here, the bank’s small business chief aims to show how even large deals help small companies, as well as how Georgia small businesses would be affected by an Ex-Im closure. Read a rebuttal here: Ex-Im: A Conduit for Corporate Welfare
Ninety-five. That’s the percentage of the world’s customers who happen to live outside of the United States. And if you’re a Georgia small business owner looking to boost your sales and add jobs in your community, reaching that 95 percent can be a daunting task.
Commercial banks are often hesitant to offer financing to small businesses looking to gain access to new markets across the globe, and entrepreneurs who don’t have the benefit of dependable working capital or loan guarantees can lose a lot of sleep wondering what will happen if a customer halfway around the world fails to pay them on time.
That’s why the Export-Import Bank of the U.S. (Ex-Im) exists: to equip businesses with the reliable financing tools they need to confidently enter new markets, reach new customers abroad and, most importantly, add new jobs here at home.
For more than 80 years, that’s exactly what we’ve done. Last year, we set a new record for the number of small business transactions we authorized at Ex-Im—more than 3,400, in fact, including 61 here in Georgia. While some people mistakenly believe that we only deal with large businesses, the facts tell the real story: nearly 90 percent of our customers are small businesses, who depend on us to fill in the gaps when private banks are unable or unwilling to offer financing.
One of those small businesses is the Hudson Pecan Co. of Ocilla, Ga. Randy Hudson’s family has been harvesting pecans for more than 150 years, and his business has been around since 1977. But it wasn’t until just a few years ago that Randy decided it was time take his pecans out to new frontiers. Equipping his company with a $3.6 million working capital loan guarantee from Ex-Im gave Randy the freedom to grow his international customer base and reach new markets in Canada, Asia and the Middle East.
In just a few years, Hudson Pecan’s sales rose from about $500,000 to more than $20 million, and exports now make up about 90 percent of their total sales. That growth empowered Randy to hire 25 new employees in Ocilla, including his own son. When we asked Randy about his experience with Ex-Im, he had this to say: “It is next to impossible for small businesses with little liquidity to qualify for loans, and that’s why the Ex-Im Bank is so vital. Without it, we would not have grown and added jobs like we have.”
Whether it’s the Hudson Pecan Co., Thrush Aircraft in Albany, Piedmont Paper in Marietta, or the thousands of other small businesses we support, the end of the story is nearly always the same: more American jobs. Our financing has supported nearly 1.2 million jobs over the last five years in communities across America, and, thanks to our responsible risk management and historically low default rate, we generated a surplus of more than a billion dollars last year for the U.S. taxpayers.
Of course, we also finance big projects from time to time, but it’s important to remember that even the 10 percent of our customers engaged in large-scale transactions employ huge numbers of Americans and have long supply chains made up of thousands of small businesses that benefit from Ex-Im support.
In Saudi Arabia, we provided $5 billion in financing for the Sadara Project, a joint venture between Dow Chemical and Saudi Aramco to build a $20 billion petrochemical complex, the largest of its kind to ever be built in one phase.
Dow Chemical is certainly a big business, and deals don’t get much bigger than that. Because commercial banks tend not to engage in the sort of long-term financing necessary to make projects like Sadara happen, Ex-Im was brought in to the mix. Though other countries, including Korea, were doing everything in their power to win that business, we worked with the project partners to make sure that more of Sadara’s supply chain—and the jobs that come with it—was moved to the U.S.
The result of our involvement? More than 18,000 quality jobs at 70 U.S. companies, including $600 million going directly to American small businesses. So even when the transaction in question is a massive complex halfway around the world, Ex-Im’s competitive financing ensures that the positive effects of big projects echo loudest on the main streets of American communities, the cities and towns across the country that small business suppliers call home.
Anyone who has run a small business knows how tough it can be to thrive in a competitive environment, particularly when you’re squaring off against well-funded overseas competitors for global sales. You ought to have access to a more level playing field, so that your products can compete on their merits.
That’s what the bank does for its customers, and to remove Ex-Im from the equation is to remove an institution that has stood for responsible lending, fiscal responsibility, peace of mind and American small business jobs for more than eight decades.
Learn more about our work with small business by visiting www.exim.gov/smallbusiness.
James G. Burrows, Jr. is senior vice president for the Small Business Group at the Export-Import Bank of the United States.
