In January 2010, the President launched the National Export Initiative with the goal of doubling U.S. exports over 5 years and prioritizing exports by small businesses. This goal was a key component of the administrations plan to help the United States transition from economic crisis to sustained recovery, as increasing exports could help accelerate job growth. Some of the approximately 20 member agencies of the Trade Promotion Coordinating Committee directly assist small businesses to export overseas, including the Small Business Administration (SBA), Department of Commerce (Commerce), and the Export-Import Bank. In fiscal year 2011, these three agencies requests for export promotion funding totaled about $350 million, and SBA and the Export-Import Bank provided nearly $7 billion in financing assistance to small businesses. While Commerce has historically been the primary agency for promoting U.S. exports, in 2010, Congress directed SBA to increase its activities related to export counseling and financing. A nationwide network of over 900 Small Business Development Centers (SBDC)nonfederal entities partially funded by SBAprovides counseling, including some export counseling, to small businesses. Both SBAs Office of International Trade, which leads SBAs efforts in assisting small businesses seeking to export, and the Export-Import Bank provide financial assistance to small businesses.
In January 2013, GAO reported that some SBA services overlap with Commerce counseling services and Export-Import Bank export financing programs, as outlined below:
Select Features and Limitations of SBA and Export-Import Bank Working Capital Loan Guarantees
Program features and limitations
SBA Export Working Capital program
Export-Import Bank Working Capital Guarantee program
Single order or revolving line of credit, but allows for advances against purchase orders
Single order or revolving line of credit
Small business operating for at least 1 year (can be waived based on management experience)
Business of any size operating for at least 1 year (can be waived based on management experience)
Must meet certain financial requirements, including having positive net worth and meeting minimum standards on certain key industry ratios
Export-related inventory and accounts receivable from the export sales
Personal or corporate guarantee of the owner
Export-related inventory and accounts receivable from the export sales
Personal or corporate guarantee of the owner
Must contain more than 50 percent U.S. content
Cannot be used to finance defense articles or services, with limited exceptions
Loan percentage guaranteed
Up to 90 percent
Up to 90 percent
Loan amount guaranteed
Source: GAO analysis of Department of the Treasury, SBA, and Export-Import Bank documents.
These overlapping services can be confusing for small businesses and may result in an inefficient use of government resources. Both agency officials and some private sector representatives that GAO interviewed said overlapping services can make it difficult to navigate the federal export assistance system. According to officials from SBA, SBDCs, Commerce, and the Export-Import Bank, small businesses typically do not know which services each agency provides or where to go for assistance. Private sector representatives agreed it is challenging for small businesses to determine what each federal entity does. They noted that export financing assistance is important for small businesses to be competitive in international markets, but understanding the differences between federal loan programs for financing exports can be difficult.
Enhancing collaboration between SBA and other agencies could potentially improve program efficiency and help limit some of the confusion caused by overlapping services. GAOs prior work has outlined practices of effective collaboration, including (1) establishing clearly defined roles and responsibilities and (2) leveraging other agencies resources. SBA and Commerce officials have not clearly outlined each entitys roles and responsibilities for counseling small business clients. Not all Commerce and SBDC counseling services overlap, and Commerce and SBDC officials indicated that they try to focus on the areas where each entity has relatively more experience. For example, Commerce officials generally prefer to work with existing exporters looking to expand to different markets (known as new-to-market businesses) that can quickly take advantage of Commerces extensive services and overseas resources; businesses that are new-to-export are generally referred to SBDCs, where they can benefit from an array of general business development services. However, the division of counseling responsibilities between Commerce and the SBDCs is not so clearly defined in practice, and neither agency has developed guidance that directs SBDC counselors and Commerce staff to focus on any one type of client. Commerce and SBDC staff in the field indicated that interagency roles and responsibilities for counseling new-to-export and new-to-market companies are unclear and said they work with both new-to-export and new-to-market businesses. Officials from both entities also noted they may counsel the same clients, but they do not regularly discuss client services with one another, nor do they regularly share client information.
According to SBA and Export-Import Bank officials, overlapping financial products respond to lender preferences. Both SBA and Export-Import Bank officials GAO interviewed said many lenders prefer to work with only one agency and few lenders use both agencies products, so small businesses may be able to access only one agencys products. Therefore, if a client only meets the eligibility requirements for one agencys product but its bank does not use that product, the client may need to find a new bank in order to use a loan guarantee program. SBA and the Export-Import Bank both attempt to expedite the process through similar delegated authority programs for lenders, which allow lenders to process these loans without prior agency review. Lenders can receive delegated authority from both agencies, but SBA and Export-Import Bank staff that GAO interviewed noted many lenders are reluctant to work with both agencies due to the time and expertise needed to learn each agencys compliance standards and to process each agencys products. SBA and the Export-Import Bank may be able to explore options to harmonize export financing products and to assist lenders in more easily adapting to the rules for both agencies products.
SBA and other agencies could also better leverage one anothers resources by consistently sharing client information, where possible. Field staff from SBA, SBDCs, Commerce, and the Export-Import Bank that GAO interviewed said accessing other agencies client lists could help them reach more clients and potentially improve client services. However, the extent to which SBA and other agencies regularly share exporters information varies. SBDC counselors generally cannot share specific client information with other entities unless they receive permission from the client, and SBAs Office of International Trade does not regularly share its client list with SBDCs, Commerce, or the Export-Import Bank, nor does it regularly receive client lists from other entities. Commerce and the Export-Import Bank have an informal agreement to share certain public client information with one another on a regular basis. Agency officials noted that information sharing is limited by certain privacy restrictions, but SBA and other agencies officials told us they are currently reviewing the types of information that they could share with each other. In November 2012, the Commerce Office of Inspector General found that restrictions on sharing of client information constrained Commerces ability to collaborate with other agencies and recommended that it explore the possibility of requiring clients to waive confidentiality as a condition for receiving services. Commerce concurred with this recommendation.
In commenting on a draft of the January 2013 report on which this submission is based, SBA and Commerce noted that the agencies have begun to clarify counseling roles and responsibilities through an interagency communiqué that provides guidance on how to assess the export readiness of clients and identifies general referral channels once a business has been classified as (1) not a good candidate for exporting, (2) not ready to export, (3) ready to export, or (4) an existing exporter.
See 15 U.S.C. § 648(a)(7)(A).
To limit the extent to which SBA programs overlap with those of other agencies, in January 2013, GAO recommended that the Administrator of SBA take the following two actions to improve collaboration:
Implementation of these recommendations could help to improve the efficiency of federal export promotion services for small businesses. GAO was unable to quantify any potential financial benefits resulting from these actions because they would likely result in a more efficient use of existing resources and improved client services, rather than distinct cost savings.
The information contained in this analysis is based on findings from the product in the related GAO product section. GAO analyzed government-wide initiatives, strategies, and laws, as well as agencies documents. GAO interviewed officials from key export promotion entities in headquarters and six field locationsChicago, Dallas, Irvine (California), Miami, New York, and Portland (Oregon). GAO selected these locations based on the number of key entities in the location, the types of services provided, and Commerces assessment of the locations export potential. Commerce, SBA, and SBDC officials that provide export assistance were present in all locations, while Export-Import Bank officials were present in five of the six locations. At some locations, GAO also met with private sector representatives that used federal export assistance. GAOs interviews at these six locations are not generalizable to all U.S. locations but provided GAO with insights about how agencies collaborate with one another at the local level and challenges local officials face in doing so. GAO assessed interagency coordination primarily against selected elements of GAOs practices for enhancing and sustaining collaboration. Table 9 in appendix IV lists the programs GAO identified that might have similar or overlapping objectives, provide similar services, or be fragmented across government missions. Overlap and fragmentation might not necessarily lead to actual duplication, and some degree of overlap and duplication may be justified.
In commenting on the January 2013 report on which this analysis is based, SBA agreed with the above recommendations and noted it is taking steps to address them. SBA and Commerce provided copies of a December 2012 Interagency Communiqué that was intended to clarify counseling roles and responsibilities and provides guidance on referring U.S. businesses seeking export assistance to federal, state, and nonfederal resources according to each firms export readiness and business needs. The communiqué does not provide referral protocols for clients seeking trade finance assistance, which the communiqué said would be issued by the end of January 2013. It also notes that agencies intend to develop local Export Outreach Teams to increase awareness of local international trade expertise and enhance communication and collaboration at the local level. Among other things, the Export Outreach Teams would develop referral protocols and initiate ongoing discussions of shared clients. Thus, the communiqués plans, when fully implemented, would begin to address the recommendations above. GAO will continue to monitor the agencies implementation of these plans.
GAO provided a draft of this report section to SBA, Commerce, and the Export-Import Bank. SBA officials stated that SBA and the Export-Import Bank are taking steps to respond to GAOs recommendations, including developing a new program that bundles non-overlapping financial products from both agencies that address specific lender and exporter needs and exploring the possibility of providing joint training for both agencies export finance specialists so they are well versed in both agencies programs. SBA officials also stated that SBA and Commerce have begun organizing Export Outreach Teams throughout the SBA network to enhance communication and collaboration between SBAs partners and international trade networks. Commerce officials added that the Trade Promotion Coordinating Committee has developed a webinar on client referrals, which they planned to roll out to field locations starting in March 2013. They noted that this action, in combination with actions taken under the December 2012 Interagency Communiqué, went a long way toward addressing our recommendations.
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