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International affairs > 12. Export Promotion

Enhanced collaboration between the Small Business Administration and two other agencies could help to limit overlapping export-related services for small businesses.

Why This Area Is Important

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 administration’s 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 SBA—provides counseling, including some export counseling, to small businesses. Both SBA’s Office of International Trade, which leads SBA’s efforts in assisting small businesses seeking to export, and the Export-Import Bank provide financial assistance to small businesses.

What GAO Found

In January 2013, GAO reported that some SBA services overlap with Commerce counseling services and Export-Import Bank export financing programs, as outlined below:

  • SBDCs and Commerce provide some similar one-on-one export counseling services to small businesses. For example, both offer strategic advice to help companies identify target export markets, assist companies in ensuring they are compliant with export regulations, and develop seminars to teach small businesses about the fundamentals of exporting.
  • SBA and the Export-Import Bank offer overlapping programs that target some of the same small businesses and are delivered through some of the same lending institutions. These export working capital loan guarantee products have many similar features, but each program also has limitations, which may restrict its use in some situations, as shown in the table 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

Product

Loan guarantee

Loan guarantee

Type

Single order or revolving line of credit, but allows for advances against purchase orders

Single order or revolving line of credit

Eligibility

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

Collateral

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

Content requirements

None

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

$5 million

No limit

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. GAO’s prior work has outlined practices of effective collaboration, including (1) establishing clearly defined roles and responsibilities and (2) leveraging other agencies’ resources.[1] SBA and Commerce officials have not clearly outlined each entity’s 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 Commerce’s 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.[2] 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 agency’s products. Therefore, if a client only meets the eligibility requirements for one agency’s 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 agency’s compliance standards and to process each agency’s 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 another’s 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,[3] and SBA’s 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 Commerce’s 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.



[1]GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).

[2]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.

[3]See 15 U.S.C. § 648(a)(7)(A).

Actions Needed

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:

  • consult with Commerce and the Export-Import Bank and more clearly define roles and responsibilities of export promotion entities’ export counseling and financing staff at the agency-wide and local levels, which could assist small businesses and federal partner entities’ staff in understanding the various export assistance provided by different federal entities and maximize the use of government resources; and
  • consult with Commerce and the Export-Import Bank and identify ways to increase, where possible, sharing of client information deemed useful for SBA, Commerce, and the Export-Import Bank.

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.

How GAO Conducted Its Work

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 locations—Chicago, 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 Commerce’s 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. GAO’s 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 GAO’s 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.

Agency Comments & GAO Contact

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 firm’s 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 communiqué’s 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 GAO’s 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 SBA’s 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.

For additional information about this area, contact Loren Yager at (202) 512-4347 or yagerl@gao.gov.

Related Products

Export Promotion:

Small Business Administration Needs to Improve Collaboration to Implement Its Expanded Role
GAO-13-217:
Published: Jan 30, 2013. Publicly Released: Mar 1, 2013.

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