While the Export-Import Bank of the United States remains a political football, small companies that do business overseas got a hopeful signal from Commerce Secretary Wilbur Ross Friday when it comes to financing international deals.
When asked about his stance on the Ex-Im Bank, Ross reiterated the importance of having a form of aid to finance exports in order to remain competitive.
"Finance is clearly one of the mechanisms for international competition," Ross said on CNBC's "Squawk Box." "So, maybe there are some things in Ex-Im that can be fixed, maybe a different mechanism is needed. What I hope whatever comes out of it will do, is to help small businesses more."
With President Donald Trump's focus on American manufacturing and business growth, the future of the Ex-Im Bank has once again comes into focus. The bank, which makes and guarantees loans and provides insurance to companies doing business overseas, benefits large corporations but can also act as a powerful financial tool for some small companies doing business abroad.
The White House's position on the bank has been hard to pinpoint. As a candidate, Trump originally opposed the bank, but in February Democratic senators said the president would support the bank and help to fill two seats on its board, which would enable it to approve larger loans of more than $10 million. The bank's support of giants like Boeing and General Electric has made it a target of conservative Republicans who view it as corporate welfare for big business.
In a CNBC interview last week, Treasury Secretary Steven Mnuchin said the administration is looking at the bank and is "not interested" in its subsidizing of large corporations, adding "to the extent we think the Export-Import Bank can be competitive in helping small and medium-sized businesses, that's something that is important." The Trump administration did not immediately respond to request for further comment on the president's stance, and Ross did not give a time frame on resolving the bank's vacant seats.
Because of the bank's current limited authority to make larger loans, it's financing less, but a greater percentage of its capital is flowing to small businesses. In fiscal 2016, the bank authorized $5 billion in deals to support $8 billion in U.S. exports, and more than 50 percent of the financing went to small businesses. In fiscal 2015, about a quarter of the bank's authorized deals — $12.3 billion to support $17 billion in U.S. exports — went to smaller companies. After a battle over its reauthorization, the Ex-Im Bank is now approved to transact business through fiscal year 2019.
"Ex-Im provides financial solutions that help small businesses increase their competitiveness abroad, unlock working capital, and grow foreign sales, all the while helping to mitigate the risks of international business. About 90 percent of Ex-Im's transactions directly benefit American small businesses," said Lawton King, a spokesman for the bank.
Smaller companies are a powerful force in exporting, but major barriers exist for some in entering the international arena, including a lack of knowledge of how to get started and concerns over payment, according to a 2016 survey from the National Small Business Association, a nonpartisan advocacy group. In 2015, preliminary figures show 293,000 companies in the U.S. exported goods, of which, 98 percent were small and medium-sized exporters with fewer than 500 workers, according to the International Trade Administration. Overall, using figures from 2014, about 4 percent of all U.S. companies export goods, according to the organization.
"Ex-Im Bank is critical to small- and mid-sized exporters. The prospect of getting financing as an average small business is very difficult and exponentially more so when you're dealing with foreign buyers as an exporter," said Molly Day, vice president for public affairs at the National Small Business Association. "Ex-Im Bank fills a financing gap that enables small exporting firms to sell internationally, and ought to be strongly supported in any plan to bolster American competitiveness."
CORRECTION: The National Small Business Association is a nonpartisan advocacy group. The name was misstated in an earlier version of this article.