Ex-Im Bank Reauthorization Update

February 29, 2012

The U.S. Export-Import Bank (Ex-Im Bank), a self-sustaining federal agency, is facing a looming deadline for their reauthorization. Unfortunately, Congress failed to enact a long-term reauthorization by Sept. 30, 2011 when its renewable charter expired and has since enacted two short-term extensions. The current extension is set to expire at the end of May and includes no increase in its lending cap—currently set at $100 billion—which could cause major stoppages in new lending and support to small businesses that need it most.

Ex-Im Bank is the official export credit agency (ECA) of the U.S. It helps finance American exports of manufactured goods and services, with the objective of contributing to the employment of U.S. workforce, primarily in circumstances when alternative financing is not available. Ex-Im Bank remains a catalyst for the expansion of small-business exports while continuing to support businesses confronting aggressive foreign competition.

Ex-Im Bank currently has more business in its pipeline than it can support given the current cap limitations and, unless Congress acts soon, exporters could see their lender of last resort falter as it waits for the new reauthorization. Ex-Im may hit its lending cap by the end of March, creating a real sense of urgency in getting Congress’ attention to act now. If Ex-Im Bank reaches its cap, the independent federal agency will have to stop providing working capital guarantees and export credit insurance to U.S. exporters.

For FY2011, Ex-Im Bank authorized export financing totaling $32.7 billion, which supported $41 billion in export sales and 290,000 U.S. jobs at over 3,600 companies. Ex-Im Bank also set a record in its support of small business at $6 billion—an increase of more than 20 percent since 2010.

The reauthorization has mainly become tied up in partisan concerns over government spending. Several fiscally conservative groups have been leading the charge against the Ex-Im Bank, calling it “corporate welfare” and warning that lawmakers who support reauthorization will be noted on their scorecards. However, it is important to note that the Bank is fully self-funding and highly profitable, returning substantial sums to the U.S. Treasury each year. Since it was last reauthorized, Ex-Im Bank has returned roughly $3.5 billion to the U.S. government.

The administration also has intensified its efforts on behalf of the Bank. President Barack Obama called on Congress to reauthorize Ex-Im with a higher lending limit, emphasizing the need to compete with China and other countries on export financing.

Recently, NSBA and its international trade arm, the Small Business Exporters Association (SBEA), sent a letter to House leadership urging their prompt action to reauthorize and increase the lending cap—to $135 billion—on Ex-Im Bank. With the looming threat of potential stoppages in financing small-business exporting, more than 70 small-business owners, advocates and exporters called on lawmakers to ensure Ex-Im Bank can accommodate and support growing U.S. exports.

Please click here to view that letter

Additionally, NSBA President and CEO Todd McCracken joined National Association of Manufacturers (NAM) President and CEO Jay Timmons, among others, in leading a roundtable discussion with various reporters to discuss the current political logjam on reauthorizing the Ex-Im Bank.

The roundtable was held at NAM and featured commentary from two small-business exporters who discussed first-hand the importance of Ex-Im Bank’s products and outlined the economic impact each of their companies has had due to Ex-Im support. NSBA/SBEA also provided a handful of other key small-business stories underscoring the importance of Ex-Im Bank.

Please click here to view those stories.

Following the discussion, McCracken was cited in the Wall Street Journal as stating, “Even if they’re [small businesses] only cut off for a few weeks or month from the export financing they need, they may lose their customer for a generation or even permanently as a result of that, which could affect jobs and economic growth for the foreseeable future,” said Todd McCracken, president of the nonprofit organization representing small businesses. “We think this is a very significant threat to exporters and our economy right now, the indecision we face around the Export-Import bank.”

Despite some arguments of late from more conservative quarters that Ex-Im Bank is simply corporate welfare,Portfolio.com had the following quote from McCracken: “Maybe Boeing could finance its exports without Ex-Im’s help. But most small exporters couldn’t,” said Todd McCracken, president of the National Small Business Association. “There simply isn’t another mechanism available to them,” he said.

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