Eximbank, SBA, and States Use Various Delivery Approaches

Eximbank and SBA emphasize different delivery approaches for facilitating their programs. Eximbank relies on its U.S. Division and network of delegated authority lenders, whereas SBA relies primarily on staff with lending authority it has assigned to the USEACs and on its network of district offices. Eight states also have export finance programs that provide working capital guarantees. The remaining seven states surveyed did not have export finance programs. The agencies’ efforts to harmonize and, in other ways, improve their programs appear to have increased the level of loans guaranteed and the extent of exporter and lender participation. These program changes, including those related to the agencies’ harmonization efforts, appear to have helped expand the use of the program, improve SME access to working capital, and increase the number of lenders participating in export financing. Issues Associated With Expanding the Use of Cooperative Agreements

To facilitate small business export finance, Eximbank and SBA have established more cooperative agreements with both the private and public sectors. Eximbank established partnerships with state and local government offices and private organizations to help market its small business financial products. In September 1996, it implemented a pilot program delegating authority for approving working capital guarantees to six of the agency’s state partners. Potential Implications of Transferring SBA’s Export Working Capital Program to Eximbank

In 1993, TPCC recommended that SBA’s Export Working Capital Program should be merged into Eximbank’s program if the agency’s harmonization efforts were unsatisfactory. Although Eximbank and SBA have made progress in harmonizing their programs, a number of factors would need to be considered before any such transfer occurred. Eximbank’s Program May Not Be Accessible to Some Exporters

If SBA’s Export Working Capital Program were transferred to Eximbank, SMEs in some states might not have convenient access to the current lenders who participate in Eximbank’s Delegated Authority Program. Some SMEs currently served by SBA may not have access to Eximbank’s Working Capital Guarantee Program because of statutory restrictions on the types of loans Eximbank can guarantee and a difference in Eximbank’s and SBA’s credit qualification requirements. We also reviewed Eximbank and SBA documents on various arrangements aimed at facilitating export working capital guarantees, such as the Eximbank Delegated Authority Program, the Eximbank City/State Program, SBA coguarantee arrangements with states, and SBA agreements with intermediaries to package export working capital loans. To identify the issues associated with expanding the number of cooperative agreements in the federal working capital guarantee programs, we focused on delegating authority to lenders and devolving greater responsibility for export working capital programs to the states. Main Components for Delivering Export Working Capital Programs to Small- and Medium-Sized Enterprises

The U.S. Export-Import Bank (Eximbank) relies heavily on its U.S. Division and delegated authority lenders for delivering its Working Capital Guarantee Program. The Small Business Administration (SBA) relies on the U.S. Export Assistance Centers (USEAC) and district offices to deliver its Export Working Capital Program. GAO Comments

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Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the current government programs that provide export working capital for small- and medium-sized enterprises (SME), focusing on: (1) federal and state approaches for providing export working capital; (2) federal efforts to harmonize the export working capital programs of the U.S. Export-Import Bank (Eximbank) and the Small Business Administration (SBA); (3) issues associated with increasing the number of cooperative agreements with lenders and devolving greater responsibility for export working capital programs to the states; and (4) the potential implications of transferring SBA's export working capital program to Eximbank.

What GAO Found

GAO found that: (1) Eximbank and SBA have programs that provide guarantees to facilitate export working capital loans for SMEs, however, the agencies emphasize different delivery approaches; (2) Eximbank implements its program primarily through a specific division within the agency and a network of lending institutions that have been delegated with authority for approving the agency's working capital guarantees; (3) SBA relies primarily on specialists with lending authority that it has assigned to the U.S. Export Assistance Centers network and on the agency's 69 district offices to implement its working capital program; (4) both Eximbank and SBA have established other arrangements with state and local offices to help administer their working capital programs; (5) eight states have export guarantee programs specifically geared to assisting small businesses which provide a wide range of funds, staff, and activity levels involving export financing for SMEs; (6) Eximbank and SBA have harmonized certain aspects of their export working capital guarantee programs; (7) while harmonization was underway, Eximbank and SBA made other changes aimed at improving their own export finance assistance programs for small businesses; (8) these efforts to harmonize and improve their programs appear to have helped simplify the lending process, increase the number and value of loans guaranteed, and expand the number of exporters and lenders who participate in the programs, however, some program differences remain; (9) to leverage federal funds and provide SMEs with more export financing, Eximbank and SBA have set up cooperative arrangements with both the private and public sectors; (10) Eximbank also has a pilot program underway that delegates lending authority to six state export finance organizations; (11) the potential to further expand cooperative agreements would be affected by various factors; (12) the Trade Promotion Coordinating Committee proposed transferring SBA's Export Working Capital Program to Eximbank if harmonization efforts were unsatisfactory; (13) GAO identified a number of factors that would need to be considered before any transfer of program responsibility from SBA to Eximbank were to take place; and (14) these factors are: (a) some exporters currently served by SBA may not be served by Eximbank; (b) the Eximbank and its network of delegated authority lenders may not be accessible to some SMEs currently assisted by SBA; and (c) the consolidation of the programs may lead to only minimal cost savings.