Small Business Updates
Good Morning, Chairman Reed, Director Pryor, Director Bachus, and our Ex Officio Members of the Board. My name is Jim Burrows, Senior Vice President in the Office of Small Business. This is my first opportunity to speak at an EXIM Board Meeting and I appreciate the opportunity.
We have roughly 78 hard-working staffers dedicated to assisting small businesses here at EXIM. For Fiscal Year 2019 we have authorized 1,504 small business transactions totaling $1.5 billion. Since Chairman Reed was sworn in on May 9th through the close of business yesterday, July 30th, The Agency has authorized roughly 442 small business transactions totaling $464 million.
Thank you for allowing me time to give you a brief overview of EXIM's Small Business Group.
First, let me start by quickly sharing with you how EXIM defines "Small Business". The EXIM Charter directs The Agency to follow Section 3(a) of the Small Business Act. Which, in short, means we follow the Small Business Administration's established size standards by industry sectors. The Small Business Administration uses the North American Industry Classification Code System code (NAICS). A good example is 500 employees for most manufacturing and mining industries and $7 million in average annual receipts for most non-manufacturing industries.
The Office of Small Business has three main operating objectives:
First, to ensure that our products meet our client's needs. The Agency is always looking for ways to improve existing products and identify gaps in the private sector. As part of EXIM's commitment to change management, we will be establishing tiger-teams to review existing products and identify opportunities to assistant American small businesses that export.
Second, The Agency is continually look for ways to find new clients, including finding better data sources and leveraging our multiplier networks. In collaboration with one of our strongest partners, The Department of Commerce, we recently developed a real time data exchange through the customer relationship management system Salesforce.
Third, we strive to create the best transactional experience for our customers, specifically through technology modernization. The Agency is working to deploy a virtual data room (VDR) for electronic exchange of documents with our delegated authority lending in the Working Capital Loan Guarantee. These kinds of enhancements enrich the overall client experience and generally increase the ease of doing business.
Within the Office of Small Business, we have a talented leadership team. Amy Shinkman, Vice President of Export Credit Insurance works with businesses and insurance brokers to underwrite all short-term insurance policies. Steve Freshour, Vice President of Business Credit works with our lenders to administer the Working Capital Loan Guarantee. Tamara Maxwell, Director of Minority and Women-Owned Business provides hands-on education and outreach to businesses owned by minorities, women, and veterans. She also handles our Client Care division, an outreach team to new and existing clients to insure businesses are fully utilizing their EXIM insurance policies. Sean Luke, Vice President of Sales and Marketing oversees our Regional Field Offices and works with businesses all over the country to educate customers about what trade finance products are available to them. Tomeka Wray, Director of Small Business Operations manages the support functions, the call center, training, and logistics. Our office reports Kimberly A. Reed, EXIM President and Chairman.
The two most popular programs for Small Businesses can be classified into two categories:
- Pre-Export Financing - Working Capital Guarantees
- Post-Export Financing - Insurance and Guarantees
As the lender of last resort, EXIM authorizations tend to run countercyclical to the U.S. economy. As the economy improves, financing is more readily available in the market and demand for EXIM has continued to decline.
The availability of private sector financing is also shown in how the average size of an EXIM small business transaction has declined. In 2012, when financial markets were tight, the average transaction size was $1.85 million compared to $1 million last year. This holds true even when product type is accounted for.
However, the decline in yearly authorizations and how that runs countercyclical to the national economy, does not tell the whole story.
We believe that the lack of a board quorum, tied with a loss in authority to operate that occurred in 2015, has had a chilling effect on EXIM's portfolio. Before losing the authority to operate, the agency averaged 274 small business authorizations per month. Afterwards, small business authorizations dropped to a steady 211 per month. While some of this is attributable to available financing by other means, we have heard both objectively and subjectively that anxiety around the agency's existence has lead customers and partners to hold back business.
A strategic priority for Office of Small Business is to build brand awareness through education and outreach in several targeted areas:
- Expanding outreach in urban and rural areas by increasing our participation in trade outreach events; in Fiscal Year 2019, we are on track to participate in close to 600 events throughout the USA
- Focusing on building partnerships with state and local governments and the Regional Export Promotions program
- Promoting interagency teamwork on events and data sharing
- Leveraging digital engagement from our website, social media, blogs, and search engine optimization
- Enriching our client's experience through system improvements and upgrades in technology
- Improving and strengthen our relationships with lenders, brokers, and other multiplier networks
Our EXIM Field Office Locations are located throughout the country. Ten out of 12 share office space with the United States Export Assistance Centers (USEACs), managed by the Department of Commerce. The two office where we are not co-located (Houston and Seattle) is because of space limitations at USEAC, however, we are in the building where the USEAC is located.