House Republicans' Obstruction, Dysfunction & Distraction 'Causing Headaches' for Small Businesses
A battle in Congress that could shut down the U.S. Export-Import (Ex-Im) Bank…is…causing headaches for small exporters…
If the 80-year-old export credit-provider loses its operating authority, its proponents argue that thousands of U.S. exporters will suffer and that Washington will lose international economic influence.
…smaller firms may be the biggest initial victims if the bank has to stop operating.
Newport Beach, California-based Firm Green Inc, for example, fears it may lose its second major Philippines green energy project in a year to the uncertainty over Ex-Im's future.
After being beaten to a landfill gas deal last year by a South Korean firm with export credit agency financing as Congress debated the same issues, FirmGreen president Steve Wilburn said he is now trying to persuade the developers of the Philippines' biggest-ever solar power plant to stick with his Ex-Im-backed design and construction proposal.
But he says time is running out to keep the $203 million, 100-megawatt project from going to China's Trina Solar Ltd as an August construction launch date looms.
The bank will have to stop lending and writing new trade guarantees on June 30 if Congress fails to act.
Wilburn's predicament is echoed by other small companies that use Ex-Im financing, credit guarantees and insurance to extend their reach into the global market. Trade bankers say they are likely to be the hardest-hit by closure of the 80-year-old institution due to a dearth of private-sector alternatives.
Rogovin, whose 140-employee firm makes steel bridge kits in Cambridge, Ohio, said some of his customers in Africa and South America are now talking to Chinese, British and French manufacturers that have unwavering support from their countries' trade banks.
"It's almost like the customers sense that this country is withdrawing from international finance," he added.
Jeb Hensarling, chairman of the House Financial Services Committee and Paul Ryan, chairman of the House Ways and Means committee…dismiss exporters' concerns that foreign competitors and aggressive export credit agencies will shove them aside.
Trade bankers say the U.S. Ex-Im's demise would leave a gap in trade financing that would be hard for the private sector to fill, and a freeze on new Ex-Im deals is already starting to take hold.
Much of the bank's financing activity is in the form of providing credit guarantees for commercial bank loans, allowing it to maximize export support while staying well under its total exposure cap of $140 billion.
Another frequent problem voiced by business owners is the reluctance by banks to accept foreign purchase contracts as collateral for working capital loans because of vetting and collection difficulties.
There is never a right time to deal a heavy and unnecessary blow to American workers and American businesses trying to sell their goods overseas.