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Fiscal Year 2008 Small Business Annual ReportTo: Board of Directors From: John Richter, Chairman, Small Business Committee Date: January 30, 2009 Re: Report on Small Business Activities Fiscal Year 2008 SUMMARY This report summarizes measurable outcomes and metrics of the Bank’s various small business mandates for the fiscal year ending 2008. This report is not intended to advocate any opinion, provide judgment upon, or present an organizational view as to the success of meeting the various small business legislative mandates. The 2009-2011 Small Business Strategic Plan (adopted in June 2008) serves as the Bank’s framework for its vision for the support of small business exporters. It provides a basis for detailed planning, sets future benchmarks, performance monitoring, and future reporting. Throughout Fiscal Year 2008, Ex-Im Bank continued to effectively change its culture to strengthen the relationship with Small Business Exporters, our largest group of customers. This heightened focus on Small Business Exporter needs made it possible for the Bank to better ensure that they are more aware of Ex-Im Bank’s range of products and services, along with the benefits of each. However, the Bank must improve “turnaround” time, and clearly articulate its credit standards to small business. America’s Small Business Exporters have more international opportunities than ever before, yet they are also face intensifying international competition. Small Business Exporters are smart, hardworking and tough, but they need all the capacity for trade financing and trade services that Ex-Im Bank and the private sector can jointly make available.
REQUIREMENTS (a) assisting in the development of the Bank’s small business strategic plans, including the Bank’s plans for carrying out section 2(b)(1)(E)(v) and (x) of the Charter, and measuring and reporting in writing the Bank’s progress in achieving the goals set forth in the plans. The Small Business Committee is pleased to report that the Bank authorized $3.2 billion, or more than 22% of total authorizations, in direct support of U.S. small businesses as primary exporters in FY 2008. This surpasses its Congressional mandate of 20%. In all, the Bank approved 2,328 small business transactions, a figure which represents 86% of the total number of transactions authorized. The Bank also authorized $465.8 million to support exports by U.S. businesses known to be minority or woman-owned.* An additional consideration is that the Bank estimates the value of the indirect small business content in the Bank’s long-term loan and guarantee authorizations during FY 2008 at more than $1.1 billion out of a total estimated export value of $9.9 billion. This represents more than 11% of the total estimated export value of the Bank’s long-term financings. A year-to-year comparison shows a slight decline in number of transactions from FY 2007, from 2,390 to 2,328, or -2.6%. In dollar terms, the small business value went from $3.4 to $3.2 billion, or -5.9% (see charts in Attachment A). In addition to the obvious market liquidity issues, competitive intelligence indicates that the primary drivers of the change were private sector displacement in core Bank products, and domestic content requirements in an era of global supply chain procurement. As a point of reference, U.S. Small Business Administration (SBA) metrics over the same period show more than 110,000 loans approved in 2007, followed by a nearly 30% drop in 2008 and a dollar value decline of 13%. SBA Acting Administrator, Sandy K. Baruah, explained the decrease in the following way, “A perfect storm of tightened credit by commercial lenders, declining creditworthiness, and reduced demand for loans from small business borrowers uncertain about the future has led to a substantial decline in the number of small business loans guaranteed by the U.S. Small Business Administration during FY 2008.”
* On each application, Ex-Im Bank asks if a business is Woman or Minority owned, but, by law cannot require the information. Since the legislative requirement was introduced in 2006, Small Business has refined its strategic planning process considerably. The Small Business Committee (SBC) convenes monthly, with good attendance and participation. The SBC recently completed its 2009-2011 strategic plan. Consistent with previous plans, the operating divisions responsible for implementing the small business mandate have worked diligently to improve and expand the Bank’s relationship with U.S. small business exporters, including woman and minority-owned enterprises and those in rural markets. The attached memoranda from each of the responsible divisions illustrate the individual efforts of those divisions and the Bank as a whole (ATTACHMENTS 1-10).
In an effort to lessen the administrative burden on small business exporters, functional divisions at the Bank continuously streamline internal systems and processes. For example, in FY08 the Bank automated a number of functions and introduced a new delegated authority program for its medium-term guarantee product. The program is designed to reduce transaction turnaround time and provide additional support for U.S. small-business exports. Ex-Im Bank continues to strive to improve processing time, and, each of the reporting Divisions are acutely aware of this issue, and, its importance to our Small Business Success. Of course, the current financial crisis has had a significant effect on the small business community and has created a major challenge for small business exporters seeking credit. The Bank has historically extended support to small business during such times of economic crisis and has recently continued with this policy by 1) relaxing requirements for the working capital product, 2) reducing premium rates on short-term insurance and 3) establishing a credit insurance facility for major Korean banks to enable the absorption of U.S. exports.
Staffing and resources in the Small Business Division are critical to the Bank’s ability to achieve the goals set out in the small business strategic plan. The sales force expands authorizations by marketing core products directly to small business exporters (retail sales). This makes it very much a numbers game. In FY 2008, the Small Business Division participated in 255 seminars, conferences, focus groups, and trade shows throughout the country and communicated with over 4,000 individual businesses. The existing headquarters staff, which includes minority and woman-owned business and trade association outreach (newly created in FY08), operates in the wholesale business development sphere. Outreach efforts are directed towards chambers of commerce and other organizations that serve women and minority entrepreneurs. Similarly, Association Outreach encompasses liaison to industry associations so that the Bank can educate the small business community through their associations. The goal is to foster relationships with the top associations identified as having a good quality nucleus of small business exporters. In both cases, staff refer individual small business exporters with specific transactions to regional offices, or, Bank multipliers, including brokers, lenders, city/state partners and other USG agencies, for subsequent follow-up (wholesale agents). As stated, significant emphasis is placed on events attended by small business exporters, as well as minority, rural, and woman-owned enterprises. In fact, last year Domestic Business Development participated in 92 events where the audience was primarily made up of minority or woman-owned companies. The full compliment of FTEs in the Small Business Division is in place at this time, and, replacement, when necessary, is a top priority. Briefly, looking to the future, it is our intention to (1) revitalize and encourage the multipliers, and (2) improve and expand the retail domestic sales force. (c) establishing criteria for evaluating the performance of staff designated by the President of the Bank as Small Business Specialists, under section 3(g)(1) of the Charter. The Bank implemented the annual review of the Small Business specialists prior to the 2007 review cycle. The SVP of Small Business retains a staff log and documents material contributions and other personnel actions on Small Business Specialist staff as seen fit. In consultation with the divisional staff’s supervisor, the SVP also provides input. (d) coordinating the provision of services with other United States Government departments and agencies to small business concerns. Cooperation and teamwork among the U.S. Department of Commerce (DOC), the Small Business Administration’s Office of International Trade and the Bank is very important. Frequently, DOC and the Bank jointly call on prospective small business exporters and work together at International Buyer Program Trade Shows. SBA, DOC and Bank staff also complete Trade Promotion Coordinating Committee training and attend meetings to discuss interagency strategy. The Small Business Division is also working closely with the Small Business Exporters Association, and other organizations supporting small business exports. While not required in this report, a brief view of FY09 goals by Division is available on each of the ATTACHMENTS. Office of General Counsel Contribution to Small Business Information Management and Technology Report Short Term Trade Finance Accomplishments Small Business Transportation Portfolio Management Division Small Business Results for Credit Underwriting Small Business Group - President's Report Trade Finance and Insurance Report Working Capital Guarantee Program Updated: February 9, 2009 |
