[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
FIELD HEARING IN FOREST HILLS, NEW YORK: OVERCOMING CHALLENGES TO
EXPORTING FOR SMALL BUSINESSES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
FEBRUARY 22, 2016
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 114-045
Available via the GPO Website: www.fdsys.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
98-751 WASHINGTON : 2016
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HOUSE COMMITTEE ON SMALL BUSINESS
STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
RICHARD HANNA, New York
TIM HUELSKAMP, Kansas
CHRIS GIBSON, New York
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
CARLOS CURBELO, Florida
MIKE BOST, Illinois
CRESENT HARDY, Nevada
NYDIA VELAZQUEZ, New York, Ranking Member
YVETTE CLARK, New York
JUDY CHU, California
JANICE HAHN, California
DONALD PAYNE, JR., New Jersey
GRACE MENG, New York
BRENDA LAWRENCE, Michigan
ALMA ADAMS, North Carolina
SETH MOULTON, Massachusetts
MARK TAKAI, Hawaii
Kevin Fitzpatrick, Staff Director
Emily Murphy, Deputy Staff Director for Policy
Jan Oliver, Deputy Staff Director for Operation
Barry Pineles, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Steve Chabot................................................ 1
Hon. Nydia Velazquez............................................. 2
Hon. Grace Meng.................................................. 4
WITNESSES
Mr. Pascual Castano, Business Advisor, NYS Small Business
Development Center, Brooklyn, NY............................... 6
Ms. Toni Corsini, NY/NJ Regional Manager, Trade Finance
Specialist, Export Solutions Group, Office of International
Trade, US Small Business Administration, US Export Assistance
Center, New York, NY........................................... 8
APPENDIX
Prepared Statements:
Mr. Pascual Castano, Business Advisor, NYS Small Business
Development Center, Brooklyn, NY........................... 21
Ms. Toni Corsini, NY/NJ Regional Manager, Trade Finance
Specialist, Export Solutions Group, Office of International
Trade, US Small Business Administration, US Export
Assistance Center, New York, NY............................ 23
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
None.
OVERCOMING CHALLENGES TO EXPORTING FOR SMALL BUSINESSES
----------
MONDAY, FEBRUARY 22, 2016
House of Representatives,
Committee on Small Business,
Subcommittee on Agriculture, Energy and Trade,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:00 p.m., at
Bramson ORT College, 69-30 Austin Street, Forest Hills, New
York, Hon. Steve Chabot, presiding.
Present: Representatives Chabot, Meng, and Velazquez.
Chairman CHABOT. Good afternoon. This is the Committee on
Small Business, and we will come to order. The topic of the
hearing this afternoon is ``Overcoming Challenges to Exporting
for Small Businesses.'' We want to thank our panel members for
being with us here in Forest Hills for a timely and important
discussion on international trade and how small businesses and
small firms can benefit from increasing their global footprint.
Before we begin, I sincerely want to thank our ranking
member, Grace Meng, for inviting me to be with some folks in
her district and some expert witnesses here today. Grace has
been a very valued member of the Committee since she joined
Congress back in 2013, and we are really lucky to have her on
our Committee.
We are also lucky to have the ranking member of the full
Small Business Committee, Nydia Velazquez, who is also here and
we have had an excellent working relationship for many years
now. She has been the chair of the full Committee for a number
of years, and I was her ranking member. We have worked together
in a bipartisan manner, which does not always happen in
Congress, but it does on this Committee. We do not agree on
everything, but we actually agree on a whole lot, and with
respect to small businesses, we agree with each other on most
things.
Always an active participant in our Committee meetings,
Grace has been a staunch advocate for small business concerns
at every turn. And she works together with all the other
members of the Committee really in a bipartisan fashion as
well. Again, we want to thank you, Grace, for inviting us to
your district today.
As a long-time member of the House Foreign Affairs
Committee and current chair of the Committee on Small Business,
international trade has continued to be one of the topics that
I am very passionate about. One of the most important functions
of our Committee is to look for solutions to help entrepreneurs
gain access to global markets. Very often our Committee
discusses ways to grow the economy, and increase the number of
jobs being created, and sell more goods stamped ``Made in the
U.S.A.'' All these goals would help the American workforce, and
all these goals are attainable through trade.
Simply put, trade means opportunity for small businesses.
After all, 95 percent of the world's customers live outside the
borders of the United States. Yet of the 28 million small
businesses in America, only 1 percent of those small businesses
sell their goods internationally. If we tear down trade
barriers, we can make it easier for small business to
participate in the global marketplace and unleash our Nation's
most powerful economic force.
One of the barriers facing small businesses looking to
export is confusion about how even to do it, and the maze of
Federal resources only add to the confusion sometimes. The
Committee recognizes that challenge and is working on solutions
to better coordinate Federal resources so they are more
efficient, streamlined, and better able to help entrepreneurs
navigate the export process.
The importance of robust international trade for small
businesses simply cannot be overstated. We must do everything
we can to help them succeed, and hearings like this allow us to
learn from those of you on the front lines about what works and
what does not. I appreciate your taking the time to help
educate us on what is faced every day by small businesses
around the country, and I look forward to working with our
colleagues on both sides of the aisle to keep the doors to
trade open for small firms.
I might add that we also had another hearing in Ms.
Velazquez's district this morning down at City Hall, and it was
a very interesting hearing. And we were talking about small
business manufacturers and how to reinvigorate that sector, and
try to learn around the country what New York is doing right.
There are an awful lot of things that are occurring right here
in the small business manufacturing area that hopefully we can
replicate around the country without taking jobs away of
course. We want to create jobs all over the country.
At this point I would like to recognize the ranking member,
Ms. Velazquez, for the purpose of making an opening statement.
Ms. VELAZQUEZ. Thank you, Mr. Chairman. I want to thank
Chairman Chabot for holding a second hearing today. This
morning he joined me to hold a hearing on manufacturing at City
Hall. It is not often that the committee holds two hearings in
one day, let alone both in New York City. So for this, we are
really grateful.
I also want to recognize Representative Meng, who has been
a hardworking member of this committee and a true champion of
small businesses. She has seized the opportunity to advocate
for entrepreneurs here in Queens, and I am happy to work with
her to examine these challenges.
With foreign trade on the rise, so are opportunities for
small businesses. Here in New York, there are more than 40,000
exporters, and nearly 95 percent are small firms with fewer
than 500 employees. While small in size, these companies have
made a big impact, generating over three-fifths of New York's
total exports. According to the Department of Commerce, exports
alone supported 400,000 jobs in our state. Right here in
Queens, exporting is critical. With a diverse economy and its
close proximity to major transportation hubs, businesses in
Queens are well situated to access international markets.
This hearing is particularly well timed. This morning the
committee convened another hearing in Manhattan that examined
the city's manufacturing base. Not surprisingly, it was made
clear that foreign markets are essential to the success of our
local businesses. While local businesses are making inroads
abroad, they are not without challenges. Among these are the
time it takes to identify foreign markets, target new
customers, and learn the ins and outs of the exporting process.
In fact, nearly half of small exporters spend a minimum of a
few months a year as well as an average of 8.4 percent of their
annual operating revenue preparing to export. Compounding this
obstacle is that they often have fewer resources to expend on
the developing trade strategy or complying with complex
regulations.
Now that we are going to be voting on a trade agreement
pretty soon, it is important that we discuss what tools are
embedded in this trade agreement that will enable small
exporters to benefit. We know, for example, that when we have a
small business exporter doing business with one country, they
only have one customer, so that is not enough. We need to see
how the relevant agencies, whether it is SBA or the Department
of Commerce, can invest resources to increase small business
participation so that these businesses benefit with their
foreign countries.
In order to help bridge this divide, there are several
tools and resources available to small exporters. One key
component is the U.S. Export Assistance Centers, which will
fill a void by providing access to technical trade specialties
in over 100 cities and 80 countries worldwide. By delivering
foreign industry and market expertise as well as trade
compliance assistance, these centers help small businesses
navigate the complex terrain of the international marketplace.
To address some of these problems, the SBA and the Export-
Import Bank provides small businesses specific export financing
products. Last year, SBA loans generated $1.5 billion worth of
small business exports while the Export-Import Bank authorized
more than $3 billion in financing and insurance for small
businesses. Although those numbers are good, we need to do
better. If we know that more than 90 percent of all exporters
are small businesses, we need those numbers to have a
correlation to the number of small businesses.
International trade will always be a complex undertaking
dependent on global macroeconomic trends as well as country-
specific trade policies and resources. Regardless, it is
critical entrepreneurs are able to compete in this marketplace.
I would like to thank Chairman Chabot and Representative
Meng for holding this hearing in Queens and all the witnesses
for being here today. I yield back. Thank you.
Chairman CHABOT. The gentlelady yields back. I would now
like to recognize the gentlelady from this district, Ms. Meng,
who is the ranking member of the Agriculture, Energy, and Trade
Subcommittee, which is one of the more significant, one of the
more important Subcommittees that we have on the Small Business
Committee. She is a lead Democrat on the Committee.
Ms. MENG. Thank you, Mr. Chairman, and I want to welcome
Congressman Chabot to Queens and to New York once again. I know
it is not your first time, but we are especially privileged
today to have you in our district, and hope you enjoy the view
here as well.
Chairman CHABOT. Very much. Very much.
Ms. MENG. Also, always happy to see my colleague and my
friend, Congresswoman Velazquez. We share neighboring
districts, and Congresswoman Velazquez, our ranking member on
the entire Small Business Subcommittee, has the difficult job
of representing parts of three boroughs. And so, any time we
have you here in Queens, we are always so happy to see you. And
thank you for advocating for our small businesses as well.
This is truly one of the best committees I think in
Washington, D.C. We do try very hard, and are often successful,
in working in a bipartisan manner on many issues. So thank you.
Chairman CHABOT. Thank you.
Ms. MENG. Promoting more trade opportunities for small
businesses is absolutely essential to creating valuable jobs
for New Yorkers. As we generate these new employment
opportunities, we must do so in a way that provides a strong
foundation for exporters. And this means focusing our attention
on the challenges that New York small businesses face in
attempting to export their goods. The New York metropolitan
area is the second largest exporting market in the U.S. with
over $105 billion in exports. As a result, exporting is the key
to our growth, and we must take steps to build on its
successes.
With 95 percent of all consumers living outside the U.S.,
trade is critical to small businesses. In fact, 96 percent of
the nearly 33,000 exporters in New York are small firms, and
with New York manufacturers selling over $68 billion worth of
their products overseas, 80 percent of all New York exports, it
becomes even more important to reduce the burdens they face
while selling globally.
In 2014, these exports supported nearly 390,000 jobs,
showing the real impact that trade can have not only on the
livelihoods of many small business owners, but also on the
State's economy. But even with these successes, it is clear
that our businesses could sell even more goods to foreign
customers. This is particularly important because small
businesses that export have reported significant benefits,
including increased profits and sales and a diversified and
expanded customer base that provides stability.
Leveling this playing field is a challenging goal, and
typically our country has tried to do so through free trade
agreements. But more often than not, such accords have left
something to be desired. While these free trade agreements
benefit some U.S. companies, they often do so at the expense of
other American companies.
Opening borders is just not enough. We also have to ensure
that the rules are not overly burdensome and resources are
available. While tools exist for business owners to utilize to
increase their competitiveness abroad, action must be taken to
make them more efficient. These resources include specialized
programs that assist companies in selling their products in
foreign markets. Individually, none of these programs are
sufficient to shift the balance of the U.S. trade deficit. But
when taken as a whole, these initiatives can play a useful role
in stimulating exports.
Among the agencies providing services are the International
Trade Administration, which through its U.S. export assistance
centers can assist in identifying international customers,
create market and trade strategies, and help with often complex
foreign rules and paperwork requirements. Other agencies,
including the SBA and Ex-Im Bank, provide specialized financing
packages for U.S. exporters. These loans and lines of credit
are often essential in completing a foreign transaction. Taken
together, these programs provide the means for New Yorkers to
identify and win foreign customers.
Regardless of the many challenges facing small exporters,
one thing is certain. We need New York's exporters to be strong
and ready to take advantage of any and all foreign market
opportunities. As the second largest exporter in the U.S., the
American economy is relying on us. Given this and the benefits
that small businesses gain when they engage in international
trade, it is clear that anything we can do to strengthen the
ability of small business exporters to compete globally will
come back to our State many times over.
I want to thank all of our witnesses in advance today, and
I look forward to your testimony. I yield back.
Chairman CHABOT. Thank you very much for your statement.
And I will just take a moment to kind of explain how the
Committee process works here and the time rules. We operate
under what is called the 5-minute rule. It is pretty simple. It
means each of you get 5 minutes to testify. We will keep track.
I guess, Joe, who is keeping, you got it over there? Okay.
The lighting system will be on. The yellow light will let
you know you got a minute to wrap up, and the red light will
come on, and that means that you have gone through your 5
minutes. We will give you a little flexibility if you need to
wrap up, but, you know, try to keep it close if possible. Then
we operate under the same 5-minute rule. We will ask questions.
We may go into a second round if we still have more, or maybe
not if you have answered our all our questions.
I would now like to yield back to Ms. Meng for the purpose
of introducing our distinguished panel here this afternoon.
Ms. MENG. Thank you, Mr. Chairman. It gives me great
pleasure to introduce our witnesses for today's hearing. First,
we have Mr. Pascual Castano, the business advisor at the New
York State Small Business Development Center in Brooklyn. Mr.
Castano advises his small business clients to develop their
business plans and identify avenues for exporting goods and
services. Prior to joining the SBDC, he worked as the director
of new business development for a Columbian-based investment
relations consultant firm.
We are also pleased to have Ms. Toni Corsini joining us.
Ms. Corsini is a senior trade finance specialist and New York/
New Jersey regional manager representing the SBA Office of
International Trade at the U.S. Export Assistance Center in
downtown New York City. Prior to joining the Federal government
in 2008, Ms. Corsini held the position of vice president and
manager of trade services, marketing, and communication for
North America at a large global financial institution
headquartered in New York City.
Ms. Corsini is well known in the business and banking
communities, having spent over 40 years in trade finance as a
vice president for commercial banks in both New York State and
New Jersey, and as an export manager in the manufacturing
sector. Ms. Corsini has conducted international trade finance
classes and courses for many years for high-profile
corporations, and continues to conduct trade finance courses
for educational institutions in New York and New Jersey. Ms.
Corsini holds degrees in business management and in banking.
Thank you both for joining us today.
Ms. CORSINI. Thank you.
Mr. CASTANO. Thank you.
Chairman CHABOT. Thank you very much. Okay, Mr. Castano, we
will begin with you, and you are recognized for 5 minutes.
Mr. CASTANO. Yes, thank you.
Chairman CHABOT. Thank you.
STATEMENTS OF PASCUAL CASTANO, BUSINESS ADVISOR, NEW YORK STATE
SMALL BUSINESS DEVELOPMENT CENTER, NEW YORK, NEW YORK; AND TONI
CORSINI, NEW YORK/NEW JERSEY REGIONAL MANAGER, TRADE FINANCE
SPECIALIST, EXPORT SOLUTIONS GROUP, OFFICE OF INTERNATIONAL
TRADE, U.S. SMALL BUSINESS ADMINISTRATION, U.S. EXPORT
ASSISTANCE CENTER, NEW YORK, NEW YORK
STATEMENT OF PASCUAL CASTANO
Mr. CASTANO. First of all, thank you so much for inviting
me to be here. I'm glad to be able to have testimony to you and
show you the work that we do at the SBDC.
My name is Andres Pascual Castano. I'm business advisor for
the Small Business Development Center. We're located at College
of Technology in Brooklyn, and I'm here representing the New
York State Small Business Development Center. We are a not-for-
profit organization that we're funded mainly by the SBA, as you
know. New York State and the----
The New York Small Business Development Center is a not-
for-profit organization that is funded mainly by the SBA, the
New York State, and the City College of Technology,
specifically for our center.
We are part of an extensive network of centers all around
the U.S. following the same model, and thanks to our partners
in the private and public sector, we are able to offer our
services free of charge.
Through our network of 24 regional centers, SBDC, we
provide customized solutions through advisement, education,
research, and advocacy for entrepreneurs, innovators, and the
small business community. The services we focus on are women,
minorities, people with special needs, and veterans clients.
The key areas for our particular Brooklyn SBDC are minority
women business enterprise certification and mentoring once the
certification is granted, international trade basic assistance,
the Barron entrepreneurship, and the New American Empowerment,
as we do it through our Organization of Latino Entrepreneurs
called OLE.
We also offer assistance related to technology and
innovation, selling to the government, regulatory compliance,
and disaster recovery. Soon, we'll be offering cybersecurity in
response to the increase of these specific area of small
business.
On a daily basis, most of our clients come into a center
asking for grants or loans for their respective projects. It is
important that we advisors ask our clients qualifying to
determine what is at the root of the concepts, businesses, or
the reason that they think they need money. We at SBDC do not
lend money, but we help our clients understand what they truly
need to be successful to start their business or to improve
their existing business.
The ideal outcome is to get each client to understand their
market, their customer base, their process, and the
organization for what it is and what it should be. We help to
increase business intelligence, assisting with financial
planning, marketing, sourcing, and HR issues. Once a further
diagnosis is made, one of these areas might become prioritized,
and a course of action is set.
Central to our job is to be a mentor for life or as long as
the client feels necessary. We want to have a long-term
relationship with our clients, and small businesses have
different needs depending on different stages. We want to be
there for them at all stages.
In relation to exporting and international trade, as this
is truly an important component of the creation of jobs and the
expansion of our economy, it is important to consider that 95
percent of customers are located beyond the U.S. 97 percent of
exporters are small businesses, but only represent less than
one-third of the known export body of U.S. goods. The potential
for exporting for small business is huge, and we need to
address that.
At SBDC we understand the importance of educating and
putting resources available to our clients in this matter. When
clients reach out to us for exporting assistance, they usually
become accidental exporters. That means they have the Web site
and somebody else somewhere in a foreign country find them, and
they order from them. They are not ready for the actual formal
process of exporting. When they come to us, they say, oh, we
find someone. We'd like to explore how it is become a real
exporter.
When coming to us, they're usually accidental exporters,
and they actually don't have the knowledge to take over big and
continuous orders from overseas, and they usually come with all
different assumptions or different needs. Some of them come to
us saying I'm a small business. Exporting is just for big
companies or corporations. It's just too much for me to deal
with. I'm afraid I won't get paid. Exporting is too expensive.
Exporting is only for products, not for services, and I'm
offering services, so I'm disqualified for that. Exporting is
too complex, and I need extensive capital or hire a lot of
employees. They also fear the competition in the local market.
My role as an advisor at the SBDC is to help our clients
understand and demystify the exporting process. We do it mainly
in the initial and exploratory stage. We provide one-on-one
advisement to assess the client's expert readiness and a set a
plan of action. We educate and guide them using templates for
creating an exporting plan that includes market research,
market entry, legal aspects, compliance, transportation,
finance, and cultural aspects of the process.
Through our research network, we help them get the
information they need to understand their market options. Once
their business is ready to export, we refer them to our
partners at the U.S. Commercial Services or other corporations.
If a business is not doing well, it's possible SBDC might
not be required. However, if improvement can be made in a
business, the SBDC is the network to go. Thank you very much.
Chairman CHABOT. Thank you very much. I appreciate your
testimony.
Ms. Corsini, you are recognized for minutes.
Ms. CORSINI. Thank you.
Chairman CHABOT. Thank you.
STATEMENT OF TONI CORSINI
Ms. CORSINI. Good afternoon, Chairman Chabot, Ranking
Member Velazquez, Subcommittee Ranking Member Meng, and other
distinguished members of the Subcommittee. It is a pleasure to
testify before you today on SBA's International Trade Program.
My name is Toni Corsini, and I work as the export finance
manager for SBA covering the five boroughs of New York, Long
Island, West Chester, Mid-Hudson, Eastern Upstate New York, and
the State of New Jersey, for SBA's export financing programs.
As you know, the opportunities for small business exports
continue to grow with small businesses accounting for nearly 34
percent of all U.S. export dollars in 2014, up from 29 percent
in 2006. But while opportunities exist, the sale will never
take place if a company lacks the capital to be able to fund
the transaction. So while the SBA is more broadly involved in
ensuring that small businesses have the information and
training they need to get export ready, and in ensuring that
firms have access to market opportunities by making sure that
critical rules are included in trade agreements, my division
works primarily to ensure that companies have the capital they
need to develop new markets and to compete successfully in
those markets.
In terms of connecting small exporters with new markets,
we've seen great progress through the State Trade and Export
Promotion Program--you probably know it at as STEPP--through
which SBA provides competitive grants to States to support
their small business exporters. I'm pleased that both New York
State and New Jersey took advantage of this grant program last
year, and currently are operating with grants of $664,000 for
the State of New York, and $498,000 for the State of New
Jersey. Both States help support companies attending overseas
trade shows, for example, where they can meet new prospective
agents and distributors.
With regards to financing, SBA has three targeted loan
programs that can take a small business from early stage
exporter to one that needs to expand due to export success.
Very briefly, I would like to describe the three loan programs.
As you know, Congress made the Export Express Program
permanent in the Small Business Jobs Act of 2010, with a 90
percent guarantee to lenders up to $350,000 and a 75 percent
guarantee on loans up to $500,000. Proceeds can be used to fund
any export development activity, including attending foreign
trade shows, translating literature, product modifications, et
cetera, as well as financing early transactions and for
equipment and real estate used in the production of goods and
services for export. This is a delegated lender program,
meaning that SBA provides expedited approval for such loans
typically within 36 hours.
Secondly, the Export Working Capital Program provides a 90
percent guarantee on loans up to $5 million which can finance
the entire export transaction cycle from purchase order to
collections. These are loans that my office helped structure
and underwrite working directly with lenders throughout my
territory.
Thirdly, if a company becomes successful and needs to
expand its plant and equipment as a result of increasing export
sales, SBA can provide a 90 percent guarantee on an
international trade loan, a term loan that can fund permanent
working capital up to 10 years, and real estate up to 25 years
to ensure that the company can expand and remain competitive in
global markets.
Although any SBA loan can support an exporter, we feel
these three targeted loan products have been very successful in
being able to take a small business from the early stages of
developing foreign to helping them expand due to export
success. In Fiscal Year 2015, SBA approved 1,777 loans to
exporters for over $1.4 billion. Of those, 547 loans were one
of the three core loans mentioned above for $730. Both
categories of loans were records for SBA, even during a year
when overall U.S. exports decreased 4.8 percent. In my
territory alone, 96 loans were made to small business exporters
totaling $67 million, which were estimated to have supported
over $100 million in export sales.
Thank you for the opportunity to speak with you today about
SBA's export finance programs, and I would be happy to take any
of your questions.
Chairman CHABOT. Thank you very much.
I would like to yield to Ms. Meng to ask the first
questions since we are in her district.
Ms. MENG. Thank you, Mr. Chairman. So unfortunately,
Cassidy Schultz Brush, the founder of Urban Chandy, who is one
of our local New York businesses, could not be with us today.
But, Ms. Castano, I believe you worked closely with her on
providing export assistance that she needed for her business to
succeed. Can you share with us some of the initial questions
that she had or came up with, and how exporting helped her
business overall?
Mr. CASTANO. Right. Cassidy is the owner of an innovative
basis. She manufactures chandeliers and light fixtures. She has
been business for about 3 years now, and when she came to me
first, she came originally as many of our clients looking for
funding. I helped her get the funding that she needed through
the process of helping her with her credit and getting her
ready for that.
In the meantime, we helped her in other different areas,
like I helped her get certified as a minority for New York
State, and also figuring out the different avenues for
exporting. To date, she exports to Mexico, to Canada, and
Australia. So like I said, she came at the beginning as an
accidental exporter. Somebody contacted her. She knew there
were some options out there, and then we started focusing on
that. That is the case. To this date, we help her through our
research network to figure other markets that can be good
potential for her, and getting ready for taking bigger orders
in the future.
Ms. MENG. How long would you say it took from the initial
moment that she wanted to start shipping overseas to when it
actually happened? What was the time frame?
Mr. CASTANO. For her, she has already some contact outside
when she first contacted me, so it did not take her that long.
We are now in the process of figuring out other potential
markets and how she can really increase her productivity and be
actually able to manufacture they look for in some other
countries.
Ms. MENG. Ms. Corsini, what is the most common problem you
hear about from New York's exporters?
Ms. CORSINI. The most common problem continues to be really
capital access. My interaction is directly with the lenders,
and I obviously get many phone calls, and I interact on a
regular basis with the small businesses. And in some instances,
the small businesses are not really prepared to sit down with
the lenders, traditional lenders, so certainly we work in
conjunction with all the SBDCs and SCORE. I cannot tell you how
many times I get phone calls from people that really do not do
not have a business structured. So sometimes it is a matter of
just kind of giving them guidance and helping them.
One of the tools that I thought was very good that SBA put
in the internet a couple of years ago is the Export Business
Planner, which is an online tool. It is free to everyone.
Anyone can go into it. It is just
www.sba.exportbusinessplanner. It guides them so that if they
have not thought of the structure they need, it gives that to
them.
Once they have gone past that, once they have a company and
all that, it is really getting the financing from the
commercial lenders. Our programs are very good. Our SBA
programs are very good. But we cannot really direct the
strategy at the lenders, so unless they are willing and able to
offer the programs, it is a bit of a challenge for us as well.
Of course, banks are structured at different levels for
their lending. For instance, we might have the Export Express
Program, which is a very good program, but it is the lower end.
The banks do not want to dedicate resources, or they may feel
that that is a lower end of a client that they are really not
looking for.
I was very happy when I joined government in the SBA
because within short order the maximum went from $1.5 to $5
million. I was thrilled because that meant that I could
actually have the dialogue with commercial lenders, and that
was kind of the lower end of commercial lending, but it gave a
great opportunity. Anything we can do to encourage the lenders
to open up the availability to capital, to the exporters, is
really the key to this.
Chairman CHABOT. The gentlelady's time has expired.
Ms. MENG. I yield back.
Chairman CHABOT. Yeah, we will get to a second round if you
have some more questions. I will now recognize myself for 5
minutes. I will begin with you, Ms. Corsini, if I can.
Now, you are with the SBA, the Office of International
Trade. The SBA, of course, is the Small Business
Administration, so you are the government. You are the entity
within the Federal government that this committee has most
direct oversight, interaction with, and works with. And one of
the principal things that you all do is guarantee loans. You
mentioned access to capital and that being a big challenge.
That is one of the most important things that you all do
through the 7(a) Program, and the 8(a) Program, and the 504
Loan Program, and all those types of things.
My question, again, keeping within the confines of the
purpose of this hearing on international trade, of all the
business in the area that you have oversight over, which you
mentioned is the State of New Jersey I guess, right?
Ms. CORSINI. Yes, the whole State.
Chairman CHABOT. Plus a lot of places in New York. Of all
the businesses that sell their products overseas, what percent
would you say of those businesses that you all actually
directly interact with in working with them on their trade
deals?
Ms. CORSINI. We are working with the lenders, so that is
the core. In other words, I do not have statistics specifically
on the companies because we are working with our approved
preferred lenders, and we are working to try to get more
lenders to offer the three export programs specifically that I
represent. That is my core role.
Chairman CHABOT. I did not directly mean the businesses
that are doing it. I meant through the lenders. The point that
I am getting at, would it be accurate to say that most of the
businesses that do do their trade internationally do not work
necessarily through the government. They find ways of dealing
with the private sector?
Ms. CORSINI. Oh, of course. Of course. Of course.
Chairman CHABOT. I assume it would be a very high
percentage that do not go through us. They do it on their own.
Ms. CORSINI. Yes. Well----
Chairman CHABOT. Probably 90 or more probably do it would
you say?
Ms. CORSINI. I cannot really say that for certain, but we
can presume. What I would say is certainly if a company is
credit worthy to begin with and now they have export
opportunity, they can get their financing for that. They would
not need the Government Guarantee Program. The Government
Guarantee Program, as we try to advance it, is to encourage the
lenders to use that as a tool to sell it internally to their
internal credit committee and to go forward.
You understand, as I am sure you do, that U.S. banks do not
like foreign receivables. A company that has either, you know,
80 or 90 percent foreign sales is not going to be considered, a
comfortable risk, if you will, from the banking committee. That
is definitely where our guarantee programs come in.
But with respect to a financially sound company that now
has export opportunity, they can get the funding directly on a
traditional level from the lender.
Chairman CHABOT. Thank you. Mr. Castano, just for the folks
that are here, anybody this might be exposed to beyond the room
and the folks that are here today, could you kind of explain
what a SBDC is and what they are for, that sort of thing?
Mr. CASTANO. The SBDC is a network of centers located all
over the U.S. We work with having the same model, the SBA the
Federal agency as the main funder. And each State and the
college where the center is located has the main partners. We
offer technical assistance, like we offer advisement, location,
research, and advocacy to all innovators, and entrepreneurs,
and existing business. We are open to the public, and our
services are free of charge.
Chairman CHABOT. Okay. Either one of you, and Ms. Meng
already touched on this, but could you go through some of the
most significant challenges that a small businessperson has if
they decide that they do want to trade internationally? What
are kind of the roadblocks? What are the things that you see
that can be most frustrating to them? Either one of you that
wants to answer the question.
Ms. CORSINI. Why do you not go first, and then I will----
Mr. CASTANO. Yes.
Chairman CHABOT. Okay.
Mr. CASTANO. Definitely one of the biggest challenges that
are out there for small businesses is to be able to demystify
the fact of risk involved in payment. A lot of the small
businesses, they are not familiar with payment assistance,
international payment assistance, so they do not know about
that. And they fear that they are not going to be paid.
Chairman CHABOT. By ``demystify,'' you mean basically they
have this idea of what it might be like, but they really do not
know.
Mr. CASTANO. Right.
Chairman CHABOT. What you do not know is pretty scary.
Mr. CASTANO. Right.
Chairman CHABOT. Why deal with that at all?
Mr. CASTANO. Right, that is correct. When they come to us,
so we help them understand what are the options so they feel
comfortable knowing that they can make it without going tech
nervous.
Chairman CHABOT. Ms. Corsini, did you want to take a look
at that?
Ms. CORSINI. Yeah. The benefit of the U.S. Export
Assistance Center, which you mentioned and where I belong
actually here locally is really, especially here in New York we
have all three agencies, sister agencies represented. So the
companies have the benefit of getting connected with the
resources from the Commerce Department, which we have at the
U.S. Export Assistance Center, with small business for
financing, and then certainly with Ex-Im Bank. We work in
conjunction, all three of us. We have a standing joke every
time we go out to do a presentation because we know the
sequence of how this is going to take.
The company can identify through the Commerce Department
warm leads with respect to their gold key services. We can help
them with the financing through our export programs and
participating lenders. Then certainly if they want to be
competitive and want to sell on an open account basis, we work
in conjunction with Ex-Im Bank to provide the credit insurance.
It is kind of a one-stop-shop, which was the concept
originally, and they do have the benefit of that. Each time
that there is an outreach, whether it is coordinated by the
Commerce Department, or Ex-Im Bank, or even SBA, we do work in
concert to try to give the small businesses the advantage to
know that these resources are there and available to them.
For me personally, I do a lot of seminars and things of
that nature, and certainly I work with our SCORE counterparts
and with the SBDCs in the territory that I cover.
Chairman CHABOT. Okay. When we talk about SCORE, we are
talking about people that are basically retired from their
business and want to give back to other folks who are maybe
going to start their own business up.
Ms. CORSINI. Absolutely.
Chairman CHABOT. They do not have to reinvent the wheel
here. Somebody else has already kind of done that, and that is
who these folks are.
Ms. CORSINI. Right. Right. Right.
Chairman CHABOT. Okay, thank you. I would now recognize the
gentlelady from New York, the ranking member of the Committee,
Ms. Velazquez.
Ms. VELAZQUEZ. Thank you. Thank you for being here. Ms.
Corsini, you know, we always hear that there are 28 million
small businesses in this country, right? But many U.S.
businesses do not consider foreign trade a priority. What do
you think it takes to change that mindset?
Ms. CORSINI. Well, in my own personal experience outside of
government all the years that I spent in banking, kind of
echoing what has been said, there is a fear factor. There is an
uncomfortable factor in that this is a big country, so a lot of
people are accustomed to just dealing from the East Coast to
the West Coast. If something goes wrong, oh, they call their
attorney and they can sue, and everything is going to turn out
all right. They do not have to worry about possibly dealing
with a foreign language, dealing with distance or things of
that nature.
Just as an aside, many times what we tell people just to
give them a comfort level, you want to start small. Start with
Canada. It is just over the border. They are very nice people.
[Laughter.]
They like us. It is that fear factor. Again, to echo what
was said by my colleague here, a small company does feel and
they have a preconceived notion that international business is
really for the big guys, not for the small companies. It is an
inbred mindset here in the United States.
In other countries, as you know, the borders are very
close. The countries are very close. It is just a given you are
always trading with another country. But here, because of the
way we are structured, they fear what they do not, and they
feel that their company is going to be injured. So it is up to
us to try to break that.
Ms. VELAZQUEZ. Right. So information is power, right?
Ms. CORSINI. Absolutely. Absolutely.
Ms. CORSINI. What I see here is that there is a wealth of
opportunities out there.
Ms. CORSINI. Right. Right.
Ms. VELAZQUEZ. Pretty soon we are going to be voting on a
trade deal with 12 countries. The way it is being sold is it is
going to help America and American workers, and it is going to
help small businesses. But the numbers do not match up.
We have a challenge here because it is not only the fear
factor. The fear factor is triggered by processes and
complexities of doing business with foreign countries. What can
you do to help provide the type of information that is needed?
What type of outreach do you do in order to bring the
information to where those local businesses are located?
A lot of them, it is natural. We have so many immigrants
that are entrepreneurs. How can we help link the possibilities
that exist in those countries with the businesses here?
Ms. CORSINI. Well, again, the outreach is one that is
combined. In other words, the product that someone might have
has to be determined whether or not it is a product that will
sell and what markets it might sell into. If a company calls me
and contacts me and they are just beginning, just to repeat, I
work in conjunction with the Commerce Department and direct
them to the local office. With respect to any specific
outreach, at least once or twice within like a quarter, I am
doing a seminar either on the programs, the SBA programs, or
specifically on the methods of payment, which was mentioned by
my colleague here, so that they get a sense, whoever signs up
for these things. They are usually all free.
They get a sense that they can do the business. They will
get paid. You know, their company will not be injured, and that
there are resources that they can turn to so that they can get
themselves together. Outreach is really the key with respect to
seminars and things of that nature. I mean, the Federal
government does not advertise. If we were, doing commercials it
would be a little bit----
Ms. VELAZQUEZ. Well, you know what? In those communities--
--
Ms. CORSINI. Yes.
Ms. VELAZQUEZ.--where people look like me and Grace, they
read all those local papers. Do you use those newspapers to
publish information so that they learn how to connect with you
and SBA----
Ms. CORSINI. Well, everything is on the Web----
Ms. VELAZQUEZ.--trade promotion programs that exist?
Ms. CORSINI. Yeah, of course. Everything is on the Web
site, on the SBA Web site. I do not know of anything directly
in the regional papers here, but everything is on the website.
Ms. VELAZQUEZ. In terms of financing, I always say that
access to capital is access to opportunity. And so, besides the
programs that provide guaranteed loans, can you tell me the
average size of the loans for small businesses?
Ms. CORSINI. Yeah, actually I do have that. Let me just get
my details here. There were some statistics given to me for SBA
overall. SBA saw an 8.1 increase in all loans to exporters with
an 8.9 percent increase in loan volume to $1.45 billion that we
spoke about from $1.34 billion in 2014. So that is 2015 figures
versus 2014.
Ms. VELAZQUEZ. I know. I would like to know in terms of the
portfolio the average loan is for $250,000, $300,000?
Ms. CORSINI. Actually the export loans range about $800,000
to $1.3 million for the export loans. That is outside of not
7(a) or 504 or anything like that. It is just the export loans.
Ms. VELAZQUEZ. Sure. Those are guaranteed, right?
Ms. CORSINI. Those are guaranteed, yeah. Those are the type
of loans that I discussed, yes.
Ms. VELAZQUEZ. Let me ask you another question, and maybe
you could also comment.
Mr. CASTANO. Yes.
Ms. VELAZQUEZ. Do you have any type of relationship with
Ex-Im Bank?
Ms. CORSINI. I'm sitting in the U.S. Export Assistance
Center, so my colleagues there and I, we are partners.
Ms. VELAZQUEZ. Okay.
Ms. CORSINI. You know, we are all partners. All three
agencies are partners in the U.S. Export Assistance Center. By
relationship, actually when I first joined, since we only had a
$1.5 million cap, if we had to put a loan for, let us say, $2
million, we had to borrow, if you will, some of that ability
via a co-borrowed loan with Ex-Im Bank. But once we had the $5
million cap, we did not have to rely on that anymore.
We work very closely for the credit insurance feature, and
there is a 25 percent reduction in premium to the exporters if
they get an SBA loan and they get the credit insurance from Ex-
Im Bank. That is reciprocal.
Ms. VELAZQUEZ. You know that we went through a big fight to
get the Ex-Im Bank reauthorized, right?
Ms. CORSINI. Reauthorized, yes.
Ms. VELAZQUEZ. Many people accused the Ex-Im Bank of being
a bank that basically promotes corporate America. There is a
cap, at least a ceiling, of 20 percent of lending from Ex-Im
Bank to small businesses. But that does not mean that they
should not go beyond the 20 percent, and that is an area where
we need to do a lot of work because the mission of the Ex-Im
Bank is to provide the kind of lending that would allow for
small businesses to compete overseas.
20 percent is still very low, and they did not achieve the
20 percent until 2014 after so much criticism coming from this
lady here.
Chairman CHABOT. The gentlelady's time has expired.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Chairman CHABOT. Thank you. The gentlelady from New York
again, the ranking member is recognized for 5 minutes.
Ms. MENG. Thank you, Mr. Chairman. I have a follow-up
question based off of what Ranking Member Velazquez asked. So
several Federal agencies offer these different export promotion
programs. You mentioned trade missions, foreign-based
matchmaking fairs. The STEPP Program you mentioned. At the
local level, are you seeing New York-based businesses actively
participating in these trade missions? Do you feel that, and
either of you can answer, that you have enough resources to be
able to reach out to the diverse communities that we have
discussed?
Staff, for example, maybe with multilingual abilities. You
have mentioned good Web sites and links. Are there ways to
access in different languages with different communities? I am
just curious.
Mr. CASTANO. Yes.
Ms. CORSINI. Well, I just want to mention, the SBA Web site
is also in Spanish, so there is a whole component in Spanish. I
do not know if there are any other languages on the table, but
it is definitely English and Spanish.
Ms. MENG. Are there plans to have other languages?
Ms. CORSINI. You would have to talk to the administrator
about that. I am not privy to that kind of information.
Ms. MENG. Thank you.
Mr. CASTANO. Our SBDC office, as I mentioned before, we
focus on veterans, and minorities, and women-owned businesses,
and we do have the people who will speak different language. We
have one advisor. She is specifically working on veterans, and
the one representing the Hispanic-Latino community, and we use
our brand OLE, the Organization of Latino Entrepreneurs, to
reach them. We do have access to them I can say.
We help through a process of expiration, and once we see
that they are ready to export, then we refer them to other
agencies. That is the basic thing. We want to be able to help
them get where they need to be to the trade missions, to go to
the other services now available out there. I will let them
know that they exist and how to get there.
Ms. MENG. I also want to thank you as part of a larger SBDC
family for helping so many of the entrepreneurs and small
business owners in our district, Congressional District 6. We
unfortunately do not have a center of our own, and while you
are front of me, I would like to continue to push for your
support----
Ms. VELAZQUEZ. We did not have funding.
Ms. MENG. Right, more funding.
[Laughing.]
Thank you, Congresswoman Chabot, for being here. So thank
you also in advance for continuing to help our small business
owners.
Mr. CASTANO. Thank you.
Ms. MENG. I yield back.
Chairman CHABOT. Thank you. The gentlelady yields back, and
I yield myself for 5 minutes. Following up on a couple of
things that Ranking Member Velazquez said, and I thought they
probably deserve the other side at least getting, because some
of our colleagues look a little differently about, for example,
the Ex-Im Bank, which has been around a long time. Some of our
colleagues would argue that it was corporate welfare, and that
when we reformed the welfare programs for lower income folks
and welfare reform under President Clinton years ago, that, we
really did not touch on the big guys, so to speak. This is one
of those programs.
It does affect small businesses as well, and that is what
we are about here. But, large companies, for example, GE
Aviation which is headquartered in my district in Cincinnati,
was a big fan of this program. I can remember having many
discussions where we were not on the same side on this
particular issue.
Some of our colleagues would argue that if the Ex-Im Bank
went away, the private sector would ultimately find ways to
adequately determine what the true costs should be of loans
that are being made so that they could move forward in other
countries. Right now they do not have to do that because the
Ex-Im Bank is there, and so it artificially changes the true
atmosphere and the cost of doing business, et cetera, et
cetera.
There is another point of this. The ranking member's point
of view prevailed in Congress overwhelmingly, I think 300, 140
or something like that, so the program was continued, and so
the funding was there. There was a period of time when nobody
knew for sure how this was going to play out, and a lot of
people were quite concerned about that. And a number of things
were not moving forward. But it did pass, and that did happen.
The gentlelady also brought up the fact that we are talking
about a pretty significant trade deal with a dozen or so of our
Pacific Rim allies, and it is a very controversial agreement.
Everybody is kind of looking at the United States and what are
we going to do about this. Some of the major candidates on both
sides have come out pretty strongly against it, including
Donald Trump on the one side and Hillary Clinton on the other
side, have both come out against it.
I think it could be a big deal, but certainly there are
many points of view on this whole thing. I spoke at the
National Press Club to the Kaufman Foundation last week. During
the course of that made some comment because they had asked
about trade. I said that I doubt if this is going to move
forward in this Congress at this point. Maybe next time, but I
am not sure about this one.
I tend to be for free trade overall personally and think
that it does means jobs in both the U.S. and the other
countries, it raises all boats. It helps everybody although
there are some people in this country that do lose their jobs,
no question about that. The argument is do we create more jobs
here than we lose, and I would argue yes, but others would say
no. It is a very challenging thing for us to do. TTIP is
another deal that we have, and that is with Europe.
I do not want to throw a grenade out there to you all, but
did you want to comment on either TPP or TTIP?
Ms. CORSINI. The only thing I would say in general terms is
that statistically it is has been shown that usually with
either bilateral or multilateral agreements, U.S. exports do go
up. Companies do find opportunities that perhaps they did not
have before, or they see that the opportunities are a little
bit easier to sell their products to those particular
countries. I think I will just leave it at that.
[Laughter.]
Chairman CHABOT. That is really wise. Mr. Castano, did you
want to----
Mr. CASTANO. Yes. Exporting is definitely, one big way of
improving the economy, creating jobs. Companies that export are
8.5 percent less likely to go out of business. That is another
issue that we need to consider.
Chairman CHABOT. My time has just about expired, so I will
yield back the balance of my time. Would either Velazquez or
Ms. Meng?
Ms. VELAZQUEZ. Yes.
Chairman CHABOT. Okay. Back to Ms. Velazquez. You are
recognized.
Ms. VELAZQUEZ. Ms. Corsini, what are some ways that
promotion programs can be improved? You are on the ground, you
work with the businesses, you represent the programs. Is there
anything that should be changed, modified, or fixed to make it
more effective?
Ms. CORSINI. The programs themselves you are talking about.
Ms. VELAZQUEZ. Yes.
Ms. CORSINI. Well, I guess----
Ms. VELAZQUEZ. Or that could be more responsive to the
needs of small businesses.
Ms. CORSINI. Well, my response is going to be very personal
because I do work with all three programs. I would say
initially I do not really understand, and my colleagues have
not really explained the historical aspect to me, as to why our
Export Express Program needs to have a division. 350,000 has a
90 percent guarantee, and the full 500,000 is a 75 percent
guarantee.
I do not really understand why that is necessary. The
banker in me says, well, is it 90 or is it 75? Just make it a
full 90 up to 500,000. Also, the 5 million that we have, it
would be nice if somewhere along the line we could raise that.
Ms. VELAZQUEZ. But you do not think that by raising it it
will put a burden on those small exporters that really would
not need the $5 million or larger, because for the banks it is
more profitable to make a $5 or $7 million rather----
Ms. CORSINI. Oh, understood. Understood. I have been there.
But what I am saying is if the smaller one was structured in a
way that perhaps was a little bit more acceptable to the
lenders, that lower end would be taken care of. That is the
level that you are concerned about. And then that would also
raise the amount that the commercial lenders could deal with if
it was just a little bit higher. I am not saying a lot. Just a
little bit, you know, maybe from $5 to $7 or somewhere down the
line maybe $5 to $10 at maximum. But at least a little bit.
That lower end is not really being served.
Now, SBA for the past 3 Fiscal Years has----
Ms. VELAZQUEZ. The same is true with 7(a)?
Ms. CORSINI. Mm-hmm.
Ms. VELAZQUEZ. The biggest gap that we have today is the
smaller.
Ms. CORSINI. Is the lower end.
Ms. VELAZQUEZ. Is the smaller loans.
Ms. CORSINI. That is right.
Ms. VELAZQUEZ. When a bank makes a $5 million, they do not
need a guarantee because that borrower does not represent
risk----
Ms. CORSINI. Right.
Ms. VELAZQUEZ.--if you qualify to get $5 million.
Ms. CORSINI. Well, the ones we see, of course, have
accounts receivable that are foreign, so that is the key for
the American lending institutions. They are not comfortable
with foreign receivables. So, yes, they need the guarantee in
order to internally get that approval that they need. SBA has
had loans of $150,000 for the past 3 years that have been free
of any fees to the lenders and to the borrowers. And there was
a definite spike in that regard upward, upward, you know?
Again, my concern has always been that we cannot really
strategize for the lenders. We cannot go in and dictate their
strategy. So anything that either we can do or----
Ms. VELAZQUEZ. But do you not think that SBA has leverage
when we provide 90 percent----
Ms. CORSINI. I think Congress has leverage.
Ms. VELAZQUEZ. This is not a legislative fix. This is using
the power that you have, the leverage that you have when such a
big volume of those loans, we provide the guarantee. That 90
percent should be a leverage for you to compel those same banks
to make those smaller loans.
Ms. CORSINI. Again, I spent many years in banking, so----
Ms. VELAZQUEZ. I am a member of the Financial Services
Committee----
Ms. CORSINI. Right.
Ms. VELAZQUEZ.--so, I, too, spend a lot of time with the
banking sector.
Ms. CORSINI. If you could, you could possibly push them a
little bit to open up their strategy and be more receptive to
our programs, and be able to put them on their books. Their
internal strategy is given to what the return is to
shareholders, so we all know that. Unfortunately, the small
businesses are caught in the middle of that.
So, yes, we do this every day, you know, day in and day out
trying to push the lenders and advance our programs. But in the
end, the banking is a business for themselves, too, so it is
unfortunate.
Ms. VELAZQUEZ. Let me ask you. In terms of geography----
Ms. CORSINI. Yes.
Ms. VELAZQUEZ.--and the amount of loans, you know, the
volume of loans, is that spread out throughout the nation, or
do you see a higher concentration in metropolitan areas?
Ms. CORSINI. Well, for the loans, if we are talking about
export loans----
Ms. VELAZQUEZ. Yes.
Ms. CORSINI.--my colleagues that are in other geographic
areas where there is more manufacturing, obviously it is tipped
a little bit heavier there than it would be here. You have
small light industry in Queens. You have light industry in
Brooklyn. Those areas would be serviced. But as far as, say,
the larger ones, and even in northern Jersey there are
manufacturers there where I have in my portfolio, the $4.5
million export working capital line of credit and things of
that nature.
Here in the metropolitan area, it is a little bit different
because you have these little niche industries or these little
niche companies, if you will. I have had several of those in
Long Island. I had one in West Chester. It was a small company,
husband and wife, only with a few employees, and they got a
large contract. It took them 9 months to get a bank that would
approve them using our export working capital deal, and I
worked closely with them. You can have a baby in 9 months, you
know? So that is the challenge.
Chairman CHABOT. Thank you. The gentlelady's time has
expired. I have had enough if you have all have unless you want
some more, another go-round?
[Laughter.]
Ms. CORSINI. Was it really that bad?
Chairman CHABOT. I do not mean that in a bad way.
[Laughter.]
I just mean I have run out of questions. You answered all
my questions.
Ms. VELAZQUEZ. Mr. Castano, how long have you been in the
SBDC?
Mr. CASTANO. I have been in it for 3 years with the SBDC.
Ms. VELAZQUEZ. How long?
Mr. CASTANO. 3 years.
Ms. VELAZQUEZ. 3 years.
Mr. CASTANO. Yes.
Ms. VELAZQUEZ. We opened that SBDC in 1996 when President
Clinton was in office, but it did not start out there. It
started at Boricua College in Williamsburg. I am so glad. We
are all very pleased with the work that you are doing.
Mr. CASTANO. Thank you so much.
Ms. VELAZQUEZ. Yes.
Chairman CHABOT. Thank you. Well, we appreciate the panel's
testimony here this afternoon. We will take back to our
colleagues in Washington on our Committee and beyond that what
we have learned here today, and follow up on this. Thank you
very much for sharing it with us.
Trade is absolutely critical to the American economy, and
that is one of the things we have tried to address this
afternoon. We want to thank Ms. Meng for welcoming us to her
district here today, and look forward to working with you in a
bipartisan manner as we continue in the Congress.
If there is no further business to come before the
Committee, we are adjourned. Thank you very much.
Ms. CORSINI. Thank you.
Mr. CASTANO. Thank you.
[Whereupon, at 3:08 p.m., the Subcommittee was adjourned.]
A P P E N D I X
Public Hearing
Overcoming Challenges to Exporting for Small Businesses
I am Andres Pascual Castano, Business Advisor for the New
York Small Business Development Center (NYSBDC) located at City
College of Technology in Brooklyn. We are a non for profit
organization funded mainly by the Small Business Administration
(SBA), the New York State and New York City College of
Technology and part of an extensive network of centers all
around the US following the same model. Thanks to our partners
in the public and private sectors, our services are free of
charge.
Through a network of 24 regional centers, the New York
Small Business Development Center (NYSBDC) provides customized
solutions through advisement, education, research and advocacy
for Entrepreneurs, Innovators and the Small & Medium Enterprise
community. We bring world class business expertise to the SME
community.
Since 1984, we have worked with 414,998 businesses, helping
them to invest $5,703,510,148 in New York's economy and create
or save 183,637 jobs.
We are the ``Go to ``Network!
The SBDC emphasizes our services to women, veterans, people
with special needs, and minority clients.
We work closely with other economic development agencies,
faculty and students at host institutions, and representatives
from private industry and business to focus resources on
assisting small businesses and entrepreneurs.
Key areas of focus with our particular SBDC are: MWBE
certification and mentoring once certification has been
achieved, International Trade basic assistance, Veteran
Entrepreneurship and New American empowerment as is evidenced
by our Organization of Latino entrepreneurs (OLE). As needs
arrive in the communities, stakeholders come to us in order to
facilitate solutions in the Business Community: ``911'',
``Hurricane Irene'', ``Hurricane Sandy'' are but a few.
We also offer assistance with issues related to:
Technology & innovation, selling to the government,
Regulatory compliance, and Disaster Recovery.
On a daily basis, most of our clients come in asking for
Grants, or loans for their respective projects. It is vital
that we as advisors gently probe with qualifying questions to
determine what is at the root of their concepts, business, or
reason that they THINK they need money. We at the SBDC do not
lend money but rather help our clients understand what they
truly need to be successful in their start up or to improve
upon the course of action they are currently on.
The ideal outcome is to get each client to see their
market, customer base, process and organization for what it is
and what it should be. We help to increase business
intelligence whether that involves, financial planning,
marketing, sourcing or HR issues. Once a fair diagnosis is made
of any one of these areas may become prioritized and a course
of action is agreed upon.
Central to how we do our jobs is to be a mentor for
``life'', (or as long as the client feels necessary)
In relation to exporting as it is a truly important
component for the expansion and job creation is our economy and
95% of costumers are located beyond U.S. borders. When clients
reach to us for export assistance, they usually come as
accidental exporters without the necessary knowledge to take
over big and continues orders from overseas. We at SBDC help
our clients understand and demystify the exporting process. We
provide the tools for them to assess their export readiness and
set a plan of action. We educate them on how to create an
exporting plan that includes market research, market entry,
legal aspects, compliance, transportation, finance and cultural
aspects of the process.
If businesses are doing as well as possible, SBDCs may not
be required. However.... if improvement can be made in a
business...the SBDC is ``The GO TO Network''!
If you want more information or want to have access to our
services, you can reach SBDC by visiting our website http://
www.nyssbdc.org/, calling our office at 718 707 0187 or email
at [email protected].
Pascual Castano
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Chabot, Ranking Member Velazquez, Committee
Ranking Member Meng, and other Distinguished Members of the
Subcommittee, it is a pleasure to testify before you today on
SBA's International Trade program. My name is Toni Corsini, and
I work as the Export Finance Manager for SBA covering the five
boroughs of New York City, Long Island, Westchester, Mid-
Hudson and Eastern Upstate NY, and the State of New Jersey for
SBA's export financing programs.
As you know, the opportunities for small business exports
continue to grow, with small businesses now accounting for
nearly 34% of all U.S. export dollars, up from 29% in FY 2006.
But while opportunities exist, the sale will never take place
if a company lacks the capital to be able to fund the
transaction. So, while the SBA is more broadly involved in
ensuring that small businesses have the information and
training they need to get export ready and in ensuring that
firms have access to market opportunities by making sure that
critical rules are included in trade agreements, my division
works primarily to ensure that companies have the capital they
need to develop new markets and to compete successfully in
those markets.
In terms of connecting small exporters with new markets,
we've seen great progress through the State Trade and Export
Promotion program, through which SBA provides competitive
grants to states to support their small business exporters. I'm
pleased that both New York and New Jersey took advantage of
this grant program last year and currently are operating with
grants of $664,000 for New York and $498,000 for New Jersey.
Both states help support companies attending overseas trade
shows, for example, where they can meet new prospective agents
and distributors.
With regards to financing, SBA has three targeted loan
programs that can take a small business from early-stage
exporter to one that needs to expand due to export success.
Very briefly, I would like to describe the three loan programs.
As you know, Congress made the Export Express program
permanent in the Small Business Jobs Act of 2010, with a 90%
guaranty to lenders up to $350,000 and a 75% guaranty on loans
up to $500,000. Proceeds can be used to fund any export
development activity, including attending foreign trade shows,
translating literature, product modifications, etc., as well as
financing early transactions and for equipment and real estate
used in the production of goods and services for export. This
is a delegated lender program, meaning that SBA provides
expedited approval for such loans, typically within 36 hours.
Secondly, the Export Working Capital program provides a 90%
guaranty on loans up to $5 million which can finance the entire
export transaction cycle, from purchase order to collections.
These are loans that my office help structure and underwrite,
working directly with lenders throughout my territory.
Thirdly, if a company becomes successful and needs to
expand its plan and equipment as a result of increasing export
sales, SBA can provide a 90% guaranty on an International Trade
Loan, a term loan that can fund permanent working capital up to
10 years and real estate up to 25 years, to ensure that the
company can expand and remain competitive in global markets.
Although any SBA loan can support an exporter, we feel
these three targeted loan products have been very successful in
being able to take a small business from the early stages of
developing foreign markets to helping them expand due to export
success.
In FY 2015, SBA approved 1,777 loans to exporters for
$1.454 billion; of those, 547 loans were one of the three core
loans mentioned above for $730 million. Both categories of
loans were records for SBA, even during a year when overall
U.S. exports decreased 4.8%. In my territory, 96 loans were
made to small business exporters totaling $67 million, which
are estimated to have supported over $100 million in export
sales.
Thank you again for the opportunity to speak with you today
about SBA's export finance programs. I would be happy to take
any questions.
[all]