Small Business Administration
Trade and Export Promotion Programs
Sean Lowry
Analyst in Public Finance
April 2, 2014
Congressional Research Service
7-5700
www.crs.gov
R43155

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Small Business Administration Trade and Export Promotion Programs

Summary
According to Census data, approximately 1% of small businesses in the United States currently
export. With roughly three-quarters of world purchasing power and almost 95% of world
consumers living outside of U.S. borders, more attention is being paid to the potential of small
business export promotion programs to grow small businesses and contribute to the national
economic recovery. In addition, some Members of Congress believe that the contributions of
small businesses to commercial innovation and economic growth could be enhanced through
greater access to growing international markets.
Consistent with these policy goals, the Small Business Administration (SBA) provides export
promotion and financing services to small businesses through its loan guarantee programs,
management and training programs, and other initiatives. SBA’s Office of International Trade
(OIT) coordinates these activities as it assists with four stages of export promotion: (1)
identifying small businesses interested in export promotion; (2) preparing small businesses to
export; (3) connecting small businesses to export opportunities; and (4) supporting small
businesses once they find export opportunities.
The Small Business Jobs Act of 2010 (P.L. 111-240) elevated trade within SBA by establishing an
Assistant Administrator to lead OIT and report directly to the SBA Administrator. The act also
authorized SBA to establish a three-year State Trade and Export Promotion (STEP) Pilot Grant
Initiative. Under the STEP initiative, which was appropriated $30 million both in FY2011 and
FY2012, SBA awarded grants to states with the goal of assisting eligible “small business
concerns” with exporting. The STEP program’s authorization expired at the end of FY2013. On
January 17, 2014, the President signed into law the Consolidated Appropriations Act, 2014 (H.R.
3547), which appropriated $8 million for the STEP program in FY2014.
SBA’s export-related loans amounted to approximately $1.2 billion (comprising approximately
5.0% of SBA’s annual loan portfolio) in FY2013. Although SBA has three loan programs that are
specifically targeted toward exporters, many of SBA’s broader loan programs support export-
related activities. Surveys indicate that relatively few clients of SBA’s management and training
programs request trade-related counseling, and some choose to receive this information from
other federal programs (such as those provided by the Department of Commerce).
This report begins with the history, role, and scope of SBA’s export promotion activities, and the
creation of OIT. Next, quantitative data from SBA and qualitative data from other sources are
used to provide performance analysis of SBA’s international programs.
This report concludes with a presentation of three issues for consideration during an era where
concerns of fiscal responsibility and economic recovery are high priorities for many policy
makers. First, are there market barriers impeding smaller firms from exporting? Second, is there a
compelling interest for the government to promote exports in the name of national
“competitiveness”? Third, are SBA’s export-promotion policies duplicative of other federal
programs? In the 113th Congress, several bills have been introduced to improve efficiencies
among small business export promotion programs (e.g., H.R. 1909, H.R. 1926, H.R. 1916, S.
1179).
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Small Business Administration Trade and Export Promotion Programs

Contents
Introduction ...................................................................................................................................... 1
SBA’s Office of International Trade ................................................................................................ 2
Export Promotion-Focused Loan Programs .................................................................................... 5
Export-Related Aspects of Management and Training Programs .................................................... 8
State Trade and Export Promotion (STEP) Grants .......................................................................... 8
Data Analysis of Performance ....................................................................................................... 10
Loan Programs......................................................................................................................... 10
Survey Responses .................................................................................................................... 14
Issues for Congress ........................................................................................................................ 17
Small Business Barriers to Exporting and Possible Market Failures ...................................... 17
Small Business Exports and U.S. Trade “Competitiveness” ................................................... 18
Duplication of Services ........................................................................................................... 20

Tables
Table 1. SBA’s Office of International Trade Total Program Costs, FY2007-FY2014, and
FY2015 Request ........................................................................................................................... 4
Table 2. Key Features of SBA’s Three Export Promotion Loan Programs ...................................... 6
Table 3. SBA Approved Loans for Export-Related Activity, FY2011 to FY2013 ......................... 11
Table 4. SBA Loan Program Approvals for Export-Related Activity, by Loan Program,
FY2011-FY2013 ......................................................................................................................... 12
Table 5. SBA Loan Program Approval Amounts for Export-Related Activity, by Loan
Program, FY2011- FY2013 ........................................................................................................ 13
Table 6. Exporter Survey Responses on SBA International Trade Programs ................................ 16

Appendixes
Appendix. A Brief Description of SBA Loan Programs Used to Support Export Activities ......... 23

Contacts
Author Contact Information........................................................................................................... 23

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Small Business Administration Trade and Export Promotion Programs

Introduction
Some Members of Congress believe that the contributions of small businesses to commercial
innovation and economic growth could be enhanced through greater access to growing
international markets. In 2010, the U.S. International Trade Commission (USITC) reported that
about 97% of businesses (i.e., firms with fewer than 500 workers) are small, but these small
businesses accounted for only about 30% of known U.S. merchandise exports between 1997 and
2007.1 During this period, the value of small businesses’ merchandise exports increased from
$152.9 billion to $306.6 billion (100.5%), compared with an increase of $385.1 billion to $719.2
billion (86.7%) among larger firms. However, the benefits of exporting are shared among a small
segment of small businesses.
According to Census data, approximately 1% of small businesses in the United States export.2
With roughly three-quarters of world purchasing power and almost 95% of world consumers
living outside of U.S. borders, more attention is being paid to the potential of small business
export promotion programs to contribute to the national economic recovery.3
Expanding small business exports is also part of President Obama’s economic policy agenda. In
2010, President Obama launched the National Export Initiative (NEI), a strategy for doubling
U.S. exports by the end of 2014 to support U.S. job creation. The President’s FY2014 budget
request emphasized the role of small business in fulfilling the NEI:
A critical component of stimulating domestic economic growth is ensuring that U.S.
businesses can actively participate in international markets and increase their exports of
goods and services … The NEI advances the Administration’s goal of doubling exports over
five years by … helping firms—especially small businesses—overcome the hurdles to
entering new export markets, assisting with trade financing, and pursuing a Government-
wide approach to export advocacy abroad.4
Economists generally do not view job creation as a justification for providing federal assistance to
small businesses.5 They argue that in the long term such assistance will likely reallocate jobs

1 See Letter from Ron Kirk, U.S. Trade Representative, to The Honorable Shara L. Aranoff, Chair of the U.S.
International Trade Commission, October 5, 2009, in U.S. International Trade Commission, Small and Medium-Sized
Enterprises: Overview of Participation in U.S. Exports, January 2010, at http://www.usitc.gov/publications/332/
pub4125.pdf. USITC refers to businesses with fewer than 500 workers as a “small or medium sized enterprise” (SME).
USITC’s size standard for an “SME” is similar to the Small Business Administration’s most common size standard for
determining whether a firm is a “small business.” See CRS Report R40860, Small Business Size Standards: A
Historical Analysis of Contemporary Issues, by Robert Jay Dilger.
2 According to CRS analysis of Census data from 2008, approximately 1.53% of employer firms with fewer than 500
employees exported. If non-employer firms are incorporated into this calculation, then 0.72% of firms with fewer than
500 employees exported in 2008. See U.S. Census Bureau, 2008 Profile of U.S. Exporting Companies, Exhibit 1a,
April 13, 2010, at http://www.census.gov/foreign-trade/Press-Release/edb/2008/; and Statistics about Business Size
(2008), Table 2a, at http://www.census.gov/econ/smallbus.html.
3 Office of the United States Trade Representative, Economy and Trade, at http://www.ustr.gov/trade-topics/economy-
trade.
4 Office of Management and Budget, Fiscal Year 2014 Budget of the U.S. Government, April 2013, p. 135, at
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/budget.pdf.
5 For further information reviewing the theoretical arguments and empirical literature on small business and job
creation, see CRS Report R41392, Small Business and the Expiration of the 2001 Tax Rate Reductions: Economic
Issues, by Jane G. Gravelle and Sean Lowry; CRS Report RL32254, Small Business Tax Benefits: Current Law and
(continued...)
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within the economy, not increase them. In their view, jobs arise primarily from the size of the
labor force, which depends largely on population, demographics, and factors that affect the choice
of home versus market production (e.g., the entry of women in the workforce). However,
economic theory does suggest that increased federal spending on small business assistance
programs may result in additional jobs in the short term.
Why do some emphasize export promotion assistance to small business? Advocates for more
federal small business export promotion assistance argue that helping small businesses to export
will lead to more jobs. A commonly held view is that small businesses are the major source of job
creation in the U.S. economy, and thus policy makers should try to encourage the growth of small
businesses as a means to increase employment. Economists have debated for decades the extent
to which small businesses contribute to job creation.6 Recent empirical studies indicate that small
business owners have different aspirations concerning the growth of their firm, and small, new
firms (i.e., startups) are more likely to expand than small businesses, generally.
This report begins with the history, role, and scope of the Small Business Administration’s
(SBA’s) export promotion activities, and the creation of SBA’s Office of International Trade
(OIT). OIT is charged with coordinating SBA’s export promotion activities, including
management and training programs, grants, and loan programs. Next, the report describes the
three major forms of SBA trade-related assistance: (1) export promotion-focused loans, (2)
management and training programs, and (3) the State Trade and Export Promotion Pilot Grant
Initiative to the states (which expired in 2013). This report then uses quantitative data from SBA
and qualitative data from surveys and federal auditors (i.e., the Government Accountability Office
and the SBA Office of Inspector General) to present performance analysis of SBA’s international
programs.
Three policy issues for Congress are also discussed. First, are there market barriers impeding
smaller firms from exporting? Second, is there a compelling interest for the government to
promote exports in the name of national “competitiveness”? Third, are SBA’s export-promotion
policies duplicative of other federal programs? These policy issues could arise in future debates
over the size and scope of SBA’s international trade programs. This debate will likely be framed
by the issues of fiscal responsibility and economic recovery.
SBA’s Office of International Trade
SBA provides export promotion and financing services to small businesses through its business
loan programs, management and training programs, and other initiatives. SBA’s OIT coordinates
these activities as it assists with four stages of export promotion: (1) identifying small businesses
interested in export promotion, (2) preparing small businesses to export, (3) connecting small
businesses to export opportunities, and (4) supporting small businesses once they find export

(...continued)
Main Arguments For and Against Them, by Gary Guenther; and CRS Report R41523, Small Business Administration
and Job Creation, by Robert Jay Dilger.
6 For more discussion of the debate among researchers on small business and job creation, see CRS Report R41523,
Small Business Administration and Job Creation, by Robert Jay Dilger and CRS Report R41392, Small Business and
the Expiration of the 2001 Tax Rate Reductions: Economic Issues, by Jane G. Gravelle and Sean Lowry.
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opportunities. SBA also participates in the regional network of U.S. Export Assistance Centers,
which are managed by the Department of Commerce’s International Trade Administration.7
Despite its name, OIT primarily encourages export promotion rather than international trade,
generally. None of OIT’s programs have a specific goal to help small businesses gain access to
lower-cost or specialized imports, such as for use as inputs in their production processes.8 This
export-oriented focus is consistent with other federal agencies.9
OIT’s programs are funded through a combination of the SBA’s appropriations for business loan
programs (i.e., subsidy costs) and for salaries and expenses. Congress does not directly provide an
appropriation amount for each of the SBA’s three export-focused loan programs or trade-related
counseling provided through SBA’s management and training programs.
Table 1 provides OIT’s total program costs from FY2007 to FY2014 and the President’s budget
request for FY2015. Total program costs include obligations covering the full cost for
administering OIT’s major programs and services. This includes direct costs from the operating
budget plus compensation and benefits; agency-wide costs, such as rent and telecommunications;
and indirect costs, such as agency overhead (e.g., financial management).10 In terms of scale,
OIT’s total program costs of $9.5 million in FY2013 accounted for approximately 1.9% of SBA’s
total program obligations for the year (not including disaster assistance).11 For FY2014, OIT’s
total program costs were approximately $10.6 million.12 For FY2015, the President requested that
$10.7 million be funded toward the total cost of OIT’s programs (an increase of $141,000
compared with FY2014).

7 For more information on the Department of Commerce’s export promotion programs, see CRS Report R41495, U.S.
Government Agencies Involved in Export Promotion: Overview and Issues for Congress, coordinated by Shayerah Ilias
Akhtar.
8 It appears, however, that some SBA management and training programs are capable of providing this sort of
counseling to their small business clients. For example, see Caron Beesley, “Importing Goods into the U.S.—An
Introductory Guide for Small Business Owners,” U.S. Small Business Administration, July 3, 2012, at
http://www.sba.gov/community/blogs/importing-goods-us-%E2%80%93-introductory-guide-small-business-owners.
9 The economic theory supporting the justifications for export promotion programs is discussed in more depth in the
“Issues for Congress” section of this report. The implicit rationale for the emphasis on export promotion is that exports
support job creation in the United States. However, comparative advantage theory in economics indicates exports from
foreign countries help those countries pay for imports from the United States and that voluntary trade occurs because it
is mutually beneficial to all parties involved. See Federal Reserve Bank of Dallas, The Fruits of Free Trade, 2002, at
https://www.dallasfed.org/assets/documents/fed/annual/2002/ar02.pdf. In addition, given the nature of global supply
chains, foreign imports into the United States could also contain some intermediate components made in the United
States. For example, see Galina Hale and Bart Hobijn, “The U.S. Content of ‘Made in China,’” Federal Reserve Bank
of San Francisco, Economic Letter, August 8, 2011, at http://www.frbsf.org/economic-research/files/el2011-25.pdf.
10 Total program costs for administering the State Trade Export Promotion (STEP) grant program are not included in
OIT’s total program costs.
11 According to SBA, its total program obligations were approximately $845.7 million in FY2013 ($337.1 million of
which was for disaster assistance). See U.S. Small Business Administration, FY2015 Congressional Budget
Justification and FY2013 Annual Performance Report, pp. 27-28, at http://www.sba.gov/content/fiscal-year-2015-
congressional-budget-justification-and-fiscal-year-2013-annual-performance-report. See also footnote 8 for more
information on how these program costs are organized in SBA’s annual budget justification.
12 This amount does not include the majority of program costs associated with making export-related loans, which are
largely included under the total program costs for “capital access programs” in SBA’s annual budget justification. See
the notes in Table 1 for more information.
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Table 1. SBA’s Office of International Trade Total Program Costs,
FY2007-FY2014, and FY2015 Request
Total Program Costsa
Fiscal Year
(in thousands of dollars)
FY2015 (request)
$10,749
FY2014
$10,608
FY2013 $9,543
FY2012 $8,943
FY2011 $7,681
FY2010 $8,016
FY2009 $4,660
FY2008 $4,154
FY2007 $5,258
Sources: U.S. Small Business Administration, Congressional Budget Justification and Annual Performance Report,
various years, at http://www.sba.gov/about-sba/sba_performance/performance_budget/
congressional_budget_justification/annual_performance_reports.
a. These amounts include direct costs from the operating budget plus compensation and benefits; agency‐wide
costs, such as rent and telecommunications; and indirect costs, such as agency overhead (e.g., financial
management). Total program costs for administering the State Trade Export Promotion (STEP) grant
program are not included in OIT’s total program costs. In a telephone cal with CRS on June 12, 2013, SBA
indicated that approximately 90% of the cost of issuing export-related loans is captured under the total
program costs for “Capital Access Programs.”
Before December 2010, OIT was a division within SBA’s Office of Capital Access. It was led by
the Director for International Trade, who reported to the Associate Administrator (AA) for Capital
Access. The Small Business Jobs Act of 2010 (P.L. 111-240) required the SBA Administrator to
appoint an AA for International Trade no later than December 27, 2010. Accordingly, OIT’s
reporting structure was realigned such that the AA for International Trade now reports directly to
the Office of the SBA Administrator. On December 23, 2010, the SBA Administrator approved
the reorganization that included the formation of the OIT and appointed the first AA for
International Trade in August 2011. These administrative changes were intended to raise the
profile of SBA’s export promotion activities within the agency.
SBA is one of several federal agencies that assist in the promotion of small business exports, and
export promotion more generally.13 SBA’s website provides a table of federal programs that help
to finance small business exports.14 Most of these federal programs are located within other
organizations, such as the Export-Import Bank of the United States, the Department of
Commerce, the Department of Agriculture, the U.S. Trade and Development Agency, and the
Overseas Private Investment Corporation.
SBA is also member of the Trade Promotion Coordinating Committee (TPCC), an interagency
committee whose objective is to coordinate and set priorities for federal agencies involved in

13 For a summary of these other federal export promotion activities, see CRS Report R41495, U.S. Government
Agencies Involved in Export Promotion: Overview and Issues for Congress, coordinated by Shayerah Ilias Akhtar.
14 U.S. Small Business Administration, “Financing your Small Business Exports, Foreign Investments or Projects,” at
http://www.sba.gov/content/financing-your-small-business-exports-foreign-investments-or-projects.
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export promotion. The TPCC then proposes a unified export promotion budget to the President.
The TPCC is composed of 20-member agencies, including the Department of Commerce, the
Export-Import Bank, SBA, the Department of State, the U.S. Trade Representative, and the
Department of the Treasury. The Secretary of Commerce chairs the TPCC.15
Export Promotion-Focused Loan Programs
SBA identifies small businesses interested in export promotion through a combination of
informational and financial programs. Technically speaking, any of SBA’s loan programs can be
used for firms looking to begin exporting or expand their current exporting operations. Indeed,
many of SBA’s loan programs contribute to this mission (analyzed in the “Data Analysis of
Performance” section).
SBA has three loan programs that specifically focus on export promotion:
• Export Express loan program, which provides working capital or fixed asset
financing for firms that will begin or expand exporting;
• Export Working Capital loan program, which provides financing to support
export orders or the export transaction cycle, from purchase order to final
payment; and
• International Trade loan program, which provides long-term financing to support
firms that are expanding because of growing export sales or have been adversely
affected by imports and need to modernize to meet foreign competition.
Table 2 summarizes the key features of SBA’s three export promotion-focused loan programs.

15 For more information, see CRS Report R41495, U.S. Government Agencies Involved in Export Promotion: Overview
and Issues for Congress, coordinated by Shayerah Ilias Akhtar.
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Table 2. Key Features of SBA’s Three Export Promotion Loan Programs
Key
Export Express Loan
Export Working Capital
International Trade Loan
Feature
Program
Program
Program
Who
Small business applicant must
[Same as 7(a) loan program]
[Same as 7(a) loan program]
qualifies?
demonstrate that the loan will
enable them to enter a new, or
Must be an eligible, for-profit
Applicants must be an eligible,
expand in, an existing export
business; meet SBA size
for-profit business; meet SBA
market. Business must have been
standards; and show “good
size standards; and show “good
in operation for at least 12
character,” credit,
character,” credit,
months (though not necessarily in
management, and ability to
management, and ability to
exporting).
repay
repay. Also, applicants must be
engaged or preparing to engage
in international trade/adversely
affected by competition from
imports.
Use of
[Same as SBAExpress loan program] Short-term, working-capital
Term loans for permanent
proceeds
loans to support export orders
working capital (e.g., raw
Revolving lines of credit (up to
or the export transaction cycle, materials), equipment, facilities,
seven years in maturity) or for a
from purchase order to final
land and buildings, and debt
term loan for export transactions, payment. May be transaction
refinance related to
including support for standby
based or asset based. Eligible
international trade
letters of credit; export
proceeds include raw materials,
development expenses, including
inventory, labor, and the
trade show participation; and
resulting foreign accounts
translation of product literature
receivable; overhead costs
incurred to fulfill an export
sales order; or standby letters
of credit.
Maximum
Gross loan amount limited to
Gross loan amount limited to
The gross loan amount is
loan
$500,000 per loan. SBA guaranty
$5 million per loan. SBA
limited to $5 million per loan.
amount
amount limited to $450,000 to
guaranty amount limited to
SBA guaranty amount limited
one borrower (and any affiliates)
$4.5 million to one borrower
to $4.5 million to one
(and any affiliates)
borrower (and any affiliates).
However, the amount
guaranteed for working capital
for the International Trade loan
combined with any other
outstanding 7(a) loan for
working capital cannot exceed
$4 million.
Maturity
[Same as SBAExpress loan program] Generally one year or less, but
Up to 25 years
may go up to three years
Terms up to 25 years for fixed
assets and up to seven years for
revolving lines of credit for
working capital
Graduated
(Fee charged on guarantied portion of loan only)
Fee Rate
Structure
[Same as 7(a) loan program] [Same as 7(a) loan program] [Same as 7(a) loan program]
Maturity one year or less: 0.25% guaranty fee;
Maturity over one year:
$150,000 or less = For FY2014, the SBA is not charging an upfront guaranty or an annual servicing fee;
$150,001-$700,000 gross amount = 3.0%;
$700,001-$1 million = 3.5%;
and 3.75% on any portion over $1 million.
Ongoing fee of 0.52%
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Key
Export Express Loan
Export Working Capital
International Trade Loan
Feature
Program
Program
Program
Maximum
[Same as SBAExpress loan program] No SBA maximum interest rate [Same as 7(a) loan program]
interest
cap, but SBA monitors for
rates
Loans $50,000 or less: prime +
“reasonableness”
Loans less than seven years:
6.5%;
$0-$25,000 = prime +4.25%;
Loans over $50,000: prime + 4.5%
$25,001-$50,000 = prime +
3.25%; over $50,000 = prime +
2.25%
Loans seven years or longer:
$0-$25,000 = prime +4.75%;
$25,001-$50,000 = prime +
3.75%; over $50,000 = prime +
2.75%
Percentage
90% guaranty for loans of
90% guaranty not to exceed
90% guaranty not to exceed
of guaranty $350,000 or less;
$4.5 million
$4.5 million (up to $4 million
75% guaranty for loans greater
maximum guaranty for working
than $350,000
capital)
Source: U.S. Small Business Administration, Loan Program Quick Reference Guide, June 2012, at
http://www.sba.gov/content/loan-program-quick-reference-guide.
For FY2014, the SBA is not charging an upfront guaranty fee or an annual servicing fee for 7(a)
or export loans in the amount of $150,000 or less. Because the fees are zero, lenders may not
charge a guaranty fee to the borrower.16
In addition to these export promotion-focused programs, SBA also supports small business
exports through its other business loan programs. These programs include the 504/CDC program,
standard 7(a) program, and specialized 7(a) programs (see the Appendix for a brief summary of
these loan programs). The size of the export activity within each of these programs is discussed in
the “Data Analysis of Performance” section of this report.
In many ways, SBA’s export promotion loan programs share similar characteristics to other SBA
loan programs. For example, the Export Express program resembles the SBAExpress program.
The SBAExpress shares several of the characteristics of the standard 7(a) loan guarantee program
except that it has an expedited approval process (which increases the risk of loan losses), a lower
maximum loan amount, and a smaller percentage of the loan guaranteed (which both reduce
SBA’s exposure to potential losses).17 Similarly, the Export Express program shares several of the
characteristics of the standard International Trade loan program, such as an expedited approval

16 U.S. Small Business Administration, “SBA Information Notice: 7(a) and 504 Fees Effective On October 1, 2013,” at
http://www.sba.gov/sites/default/files/5000-1288.pdf. An email from SBA to CRS, dated 10/30/13, confirmed that the
exemption applied to international trade loans of $150,000 of less.
17 SBAExpress has an expedited loan approval process which some have argued increases the risk of loan losses. For
example, the SBA’s Office of Inspector General has reported that just over half of the loan dollars guaranteed by the
SBA in FY2011 were made using delegated authorities and that although the SBA has made some progress in
improving its oversight procedures of these lenders, the agency does not always recognize the significance of lender
weaknesses and the corresponding risk they pose for loan losses. See U.S. Small Business Administration Office of
Inspector General, Report on the Most Serious Management and Performance Challenges, Report No. 13-02, October
15, 2012, p. 5, at http://www.sba.gov/sites/default/files/
FY%202013%20Management%20Challenges%20OIG%20Report%2013-02%20.pdf. The percentage of guarantee is
50% under SBAExpress program instead of a maximum of 75% or 85% under the standard 7(a) program.
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process in exchange for a lower maximum loan amount ($500,000 compared with $5 million) and
a lower percentage of guaranty.18
Export-Related Aspects of Management and
Training Programs
SBA provides trade-related counseling to small business owners through its management and
training programs as well as through its participation in inter-agency counseling programs. Small
Business Development Centers (SBDCs) are the largest SBA source of trade-related counseling.
SBA also offers counseling through other programs, such as Women’s Business Centers (WBCs)
and the Service Corps of Retired Executives (SCORE).19
SBA also partners with other agencies to provide small business export counseling. For example,
SBA provides small business counselor training certification program and engages in counseling
services to small business in partnership with the Department of Commerce-led U.S. Export
Assistance Centers (USEACs). As of the end of FY2013, SBA had counseled 4,307 small
business owners and trained 8,244 small business owners on export finance at various USEACs.20
State Trade and Export Promotion (STEP) Grants
The Small Business Jobs Act of 2010 authorized SBA to establish a three-year State Trade and
Export Promotion (STEP) Pilot Grant Initiative. Congress appropriated funding for the program
for two years: $30 million in FY2011 and $30 million in FY2012.
Under the STEP initiative, the SBA awarded grants to states in FY2011 and FY2012 with the goal
of assisting eligible “small business concerns” with exporting.21 The program’s objectives were to
(1) increase the number of eligible small business concerns in the state that export and (2)
increase the export volume of those eligible small businesses that already export. SBA awarded
STEP grants to states to execute export programs that assist eligible small business concerns in

18 The percentage of guarantee is 75%/90% under the Export Express program versus 90% for the International Trade
and Export Working Capital loan programs. The 90% guaranty for SBA’s Export Working Capital loan program is
similar to the 90% guaranty in the Export-Import Bank’s (Ex-Im) Working Capital Guarantee program. However, Ex-
Im’s program differs slightly from SBA’s (e.g., no limit on loans compared to SBA’s limit of $5 million). For more
information comparing these programs, see U.S. Government Accountability Office, 2013 Annual Report: Actions
Needed to Reduce Fragmentation. Overlap, Duplication, and Achieve Other Financial Benefits, GAO-13-279SP, April
2013, p. 112, at http://www.gao.gov/assets/660/653604.pdf.
19 SBDCs provide a vast array of technical assistance to small businesses and aspiring entrepreneurs. WBCs represent a
national network of educational centers designed to assist women start and grow small businesses. SCORE is a
nonprofit association dedicated to entrepreneur education where working and retired executives and business owners
donate their time and expertise as volunteer business counselors and provide confidential counseling and mentoring
free of charge. For more information on these programs, see CRS Report R41352, Small Business Management and
Technical Assistance Training Programs, by Robert Jay Dilger.
20 U.S. Small Business Administration, FY2015 Congressional Budget Justification and FY2013 Annual Performance
Report, p. 58, at http://www.sba.gov/sites/default/files/files/FY15_CBJ_FY%202013_APR.pdf.
21 Small business concerns that are eligible to participate in STEP activities must be in business for more than one year;
operate profitably; demonstrate an understanding of costs associated with exporting; possess a strategic plan for
exporting; and meet small business size requirements as defined in 13 CFR 121.
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• participation in a foreign trade mission;
• a foreign market sales trip;
• a subscription to services provided by the U.S. Department of Commerce;
• the payment of website translation fees;
• the design of international marketing media;
• a trade show exhibition;
• participation in training workshops; or
• any other export initiative determined appropriate by the AA for SBA Office of
International Trade.
Under the first grant competition in 2011, SBA awarded 51 cooperative agreements, totaling
$28,977,094. Under the second competition in 2012, the agency awarded 52 cooperative
agreements, totaling $29,996,182. Individual state project award amounts varied based on
proposed project plans and budgets. In the first grant competition, the average award was
$568,000. In the second grant competition, the average award was $577,000.22 Some of the
projects that SBA prioritized in awarding the grants included assistance to eligible small business
concerns that are owned and controlled by socially and economically disadvantaged individuals;
women-owned; veteran- or service- disabled veteran-owned; located in rural areas; new-to market
export opportunities to the People’s Republic of China; or part of a regional, industry-focused,
innovation clusters.23
SBA was authorized to competitively award STEP grants to the 50 states, District of Columbia,
Commonwealth of Puerto Rico, Virgin Islands, Guam, American Samoa, and the Northern
Mariana Islands.24 Under the STEP initiative, in most cases SBA provided 75% of the funding
required for the total project, and states provided 25%. However, for the top three states in value
of exports, SBA provided 65% of total funding, whereas these states provided 35%.25
The STEP program was the subject of an audit by the SBA Office of Inspector General (OIG) of
the overall management and effectiveness of the program during the first year of the program
(FY2011).26 According to the Small Business Jobs Act of 2010, SBA was required to report to
Congress “the effect of each grant on exports” in the state receiving the grant. OIG emphasized
that there was a the lack of established baselines to measure changes in a state’s small business

22 U.S. Small Business Administration, State Trade and Export Promotion (STEP) Pilot Grant Initiative, CFDA#
59.061, at http://www.sba.gov/content/state-trade-and-export-promotion-step-grants-pilot.
23 For information about the initial round (FY2011-FY2013) of STEP award amounts by state and a summary of each
state’s activity, see U.S. Small Business Administration, “State Trade and Export Promotion (STEP) Program Fact
Sheet,” at http://www.sba.gov/content/state-trade-and-export-promotion-step-fact-sheet.
24 Section 1699(a) of the National Defense Authorization Act for Fiscal Year 2013 (P.L. 112-239) added the Northern
Mariana Islands to the definition of eligible “states” for STEP.
25 U.S. Small Business Administration, Fact Sheet – U.S. Small Business Administration Office of International Trade
State Trade and Export Promotion Grant Program, Program Announcement No. OIT-STEP-2012-01, at
http://www.sba.gov/sites/default/files/files/
STEP%202012%20PROGRAM%20ANNOUNCEMENT%20FACT%20SHEET%20MARCH%2027%202012.pdf.
26 Small Business Administration Office of Inspector General, The SBA Need to Improve Its Management of the State
Trade and Export Promotion Grant Program, Report No. 12-21, September 25, 2012, at http://www.sba.gov/sites/
default/files/Audit%20Report%2012-21%20Review%20of%20STEP%20Grant%20Program.pdf.
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exporters or exports among some initial grant recipients, and OIG argued that the program’s
performance goals were not specific and results-oriented.27 OIG also found that some states
focused on goals that did not directly increase the number of small business exporters or the
export volume of existing small business exporters. Following SBA’s agency comments on the
study, OIG determined that SBA management was responsive to several issues raised in the report
as SBA prepared its FY2012 round of STEP awards.
On January 17, 2014, the President signed into law the Consolidated Appropriations Act, 2014
(H.R. 3547), which appropriated $8 million for the STEP program in FY2014. The President did
not request funding for the STEP program for FY2015.28 In the 113th Congress, the Next STEP
Act of 2013 (H.R. 2333) would provide for the permanent extension of the STEP program and
enact some of the reporting recommendations issued by OIG in order to help ensure the awards
were consistent with the program’s goals.
Data Analysis of Performance
This section analyzes export-related performance data for SBA’s business loan and management
and training programs.29 SBA provided the loan approval and loan amount data to the
Congressional Research Service (CRS), as they are not publically available. Qualitative data on
SBA’s trade-related programs are limited, but publically available survey responses are presented.
This qualitative data include surveys commissioned by SBA and small business trade associations
on the visibility, utilization, and outcomes of SBA’s loan, management, and training programs.
Loan Programs
SBA has three loan programs that are specifically targeted toward exporters, and many of SBA’s
broader loan programs also support export-related activities. A brief description of SBA’s non-
export focused business loan programs is included in Appendix.
Table 3 displays the number of SBA-approved loans for export activities, for FY2011 to
FY2013.30 As shown in Table 3, SBA has approved approximately 1,500 loan guarantees
annually over the three-year period. Export-supporting loans were a 2.5% ($924.9 million) share
of all 7(a) and 504/CDC loan amounts in FY2011, 2.7% in FY2012 ($926.7 million), and 2.9%
($1.2 billion) in FY2013. These loan guarantees include loans that were serviced through SBA’s
three major export promotion-focused programs as well as SBA’s non-export promotion-focused
programs.

27 Ibid.
28 U.S. Small Business Administration, FY2015 Congressional Budget Justification and FY2013 Annual Performance
Report, p. 21, at http://www.sba.gov/content/fiscal-year-2015-congressional-budget-justification-and-fiscal-year-2013-
annual-performance-report.
29 Small Business Administration, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial
Dynamics: Office of Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,” September 2012, at
http://www.sba.gov/sites/default/files/files/SBA_Converted_2012_d.pdf.
30 “Loans approved” by SBA differ from “loans disbursed” by SBA, whereas the latter represents the actual amount of
SBA support that goes towards small businesses. Some small-business owners that are approved for an SBA loan do
not receive the funds for a variety of reasons: they find credit elsewhere, their business shuts down, etc. Thus,
disbursements are always lower than approvals.
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Table 3. SBA Approved Loans for Export-Related Activity, FY2011 to FY2013
Performance Measure
FY2011a FY2012 FY2013

Number of Export-Related Loans
1,546
1,478
1,586
Number of Export-Related Loans as a
2.5% 2.7% 2.9%
Share of All 7(a) and 504/CDC Loans
Amount of Export-Related Loans
$924.9 $926.7
$1,190.5
(in millions)
Amount of Export-Related Loans as a
3.8% 4.2% 5.2%
Share of all 7(a) and 505/CDC Loans
Source: U.S. Small Business Administration (SBA) data provided to the Congressional Research Service (CRS).
Notes: Loan amounts and values are reported for all approved loans, not all disbursed loans. Given that some
borrowers cancel loans (for various reasons), the disbursed loan amounts are expected to be smal er than
approved loan amounts.
Table 4 disaggregates the total number of loans approved for export-related activities by loan
program. In general, no single loan program was responsible for the majority of SBA’s export-
related loans during the time covered by the data. The majority of loans were issued under
programs outside of the three export-focused loan programs. When added together, the three
export-focused loan programs comprised 32% of loans approved in FY2011, 28% in FY2012, and
32% in FY2013. Among SBA’s various business loan programs, the highest share of export-
focused loans were made under the SBAExpress program. SBA’s Preferred Lenders (a subset of
the standard 7(a) loan program) was responsible for third-largest share of loan approvals in
FY2011 (16%) and the second-largest share in FY2012 (18%) and FY2013 (16%).
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Table 4. SBA Loan Program Approvals for Export-Related Activity,
by Loan Program, FY2011-FY2013
FY2011a
FY2012
FY2013
Share
Share
Share
of
of
of
Loans
Export
Loans
Export
Loans
Export
Loan Program
Approved
Loans
Approved
Loans
Approved
Loans
SBAExpress 497
32%
413
28%
416
26%
Preferred Lenders Program (PLP)
250
16%
259
18%
251
16%
Export Express
287
19%
185
13%
160
10%
Export Working Capital
171
11%
159
11%
188
12%
Other 7(a)
134
9%
149
10%
141
9%
Accredited Lenders Program (ALP)
63
4%
95
6%
96
6%
International Trade
27
2%
61
4%
152
10%
504/CDC 38
2%
27
2%
41
3%
Patriot Express
36
2%
30
2%
23
1%
504/CDC Refinancing Option
2
<1%
37
3%
NA
NA
Gulf Opportunity (GO) Zone
3
<1%
27
2%
7
<1%
Smal Loan Advantage (SLA)
NA
NA
17
1%
89
6%
Certified Lenders Program (CLP)
4
<1%
7
<1%
9
1%
Rural Lenders Program (RLA)
5
<1%
7
<1%
3
<1%
Community Advantage (CA)
NA
NA
5
<1%
10
1%
Community Expressb

29 2% NA NA
NA NA
Total
1,546 100% 1,478 100% 1,586 100%
Source: Analysis of SBA data provided to CRS.
a. Percentages may not add up to 100% in each fiscal year due to rounding.
b. The Community Express program stopped operations after FY2011 and was replaced with the SLA and CA
loan programs beginning in FY2012.
Table 5 disaggregates the total amount of the loans approved for export-related activities by loan
program. As with the number of loans approved, the majority of total, export-related loan
amounts were issued under programs outside of the three export-focused loan programs. The
SBAExpress and Export Express programs account for a smaller share of total loan amounts than
total loan numbers, primarily because the maximum cap on the amount of these loans is lower
than most other SBA loan programs.
As shown in Table 5, the Export Working Capital program accounts for the highest share of the
amount of credit approved annually by the SBA to small business exporters (29% in FY2011,
24% in FY2012, and 25% in FY2013). The three export-focused loan programs accounted for
36%, 40%, and 49% of export-related loan approval amounts in FY2011, FY2012, and FY2013,
respectively. The Preferred Lenders Program also accounted for over 20% of the loan amounts
approved annually over the same period.
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Table 5. SBA Loan Program Approval Amounts for Export-Related Activity,
by Loan Program, FY2011- FY2013
FY2011a
FY2012
FY2013
Share
Share
Share
of
of
of
Amount
Export
Amount
Export
Amount
Export
Loan Program
(millions)
Loans
(millions)
Loans
(millions)
Loans
Export Working Capital
$265.9
29%
$219.6
24%
$295.7
25%
Preferred Lenders Program (PLP)
$231.2
25%
$217.6
23%
$245.3
21%
Other 7(a)
$183.6
20%
$153.6
17%
$168.5
14%
International Trade
$31.2
3%
$97.0
10%
$251.1
21%
Accredited Lenders Program (ALP)
$40.1
4%
$84.4
9%
$80.2
7%
SBAExpress $101.9
11%
$56.7
6%
$53.4
4%
Export Express
$36.2
4%
$35.2
4%
$30.9
3%
504 $23.4
3%
$18.3
2%
$30.8
3%
504 Refinancing Option
$2.4
<1%
$29.9
3%
NA
NA
Certified Lenders Program (CLP)
$2.2
<1%
$5.2
1%
$13.1
1%
Patriot Express
$4.4
<1%
$4.2
<1%
$3.2
<1%
Smal Loan Advantage (SLA)
NA
NA
$1.7
<1%
$15.5
1%
Gulf Opportunity (GO) Zone
$0.2
<1%
$1.5
<1%
$0.4
<1%
Rural Lenders Program (RLA)
$1.4
<1%
$1.1
<1%
$0.7
<1%
Community Advantage (CA)
NA
NA
$0.7
<1%
$1.6
<1%
Community Expressb
$0.8
<1%
NA
NA
NA
NA
Total
$924.9 100% $926.7 100% $1,190.5 100%
Source: Analysis of SBA data provided to CRS.
a. Amounts and percentages for each category may not add up to totals in each fiscal year due to rounding.
b. The Community Express program stopped operations after FY2011 and was replaced with the SLA and CA
loan programs beginning in FY2012.
In FY2013, the latest-available data, SBA reported that OIT assisted 1,388 small business
exporters to access capital through its export loan program. This is slightly more than the 1,283
small business exporters SBA assisted in FY2011 and the 1,346 exporters assisted in FY2011.31
According to the U.S. Census Bureau, there were 177,948 firms with fewer than 500 employees
that exported in calendar year 2011 and 174,652 firms in calendar year 2010.32 Although the
measurement periods are not exactly the same (fiscal versus calendar year), it can be

31 See U.S. Small Business Administration, FY2015 Congressional Budget Justification and FY2013 Annual
Performance Report, p. 56, at http://www.sba.gov/sites/default/files/files/FY15_CBJ_FY%202013_APR.pdf.
32 This does not include firms that were missing employment data, nonemployers (i.e., self-employed), and companies
that reported annual payroll but did not report any employees on their payroll during specified period(s) in 2010 or
2011. See U.S. Census Bureau, A Profile of U.S. Importing and Exporting Companies, 2010-2011, April 5, 2013, p. 15,
at http://www.census.gov/foreign-trade/Press-Release/edb/2011/edbrel.pdf.
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approximated that SBA’s export portfolio comprised less than 1% of small business exporters in
2010 or 2011.
SBA does not publish data on the value of the exports supported by SBA loan programs.
Survey Responses
Since 2003, the SBA’s Office of Entrepreneurial Development has commissioned an annual
“multi-year time series study to assess the impact of the programs it offers to small businesses.”33
The survey asks questions about several aspects of the client’s experiences with these programs,
including the impact of the programs on their staffing decisions and management practices. The
survey is sent each year to a stratified random sample of clients participating in the three largest
SBA management and training programs: Small Business Development Centers (SBDCs),
Women’s Business Centers (WBCs), and SCORE (also known as the Service Corps of Retired
Executives).34 The survey responses are published by the SBA and include the responses of
clients with a wide range of small business ownership and management experience.
The 2013 survey was sent to 29,957 SBDC clients, 2,997 WBC clients, and 25,183 SCORE
clients in March 2013 to “provide an analysis of client attitudes toward their counseling
experiences and client perceptions of the impact of that counseling on their businesses.”35 Of the
64,470 surveys sent, researchers received 9,459 responses (a 16% response rate).36 The survey
labels these three SBA programs as “resource partners.” The latest survey findings were released
in September 2013.
In general, the surveys indicate that these programs assisted small businesses at all stages of
development, that most of the small business owners who participated in these programs and
responded to the survey found them useful, most changed their management practices or
strategies as a result of their participation.37
Relatively few survey respondents reported that they had sought information and counseling
related to international trade. Among all of the survey participants, interactions with SBA
resource partners most often led to a business plan (54% among survey respondents), a marketing
plan (45%), or changes to general management (35%). In contrast, 4% of survey respondents

33 U.S. Small Business Administration, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial
Development Resources,” September 10, 2009, p. 2, at http://archive.sba.gov/idc/groups/public/documents/
sba_program_office/ed_finalreport_2009.pdf.
34 For more information on these programs, see CRS Report R41352, Small Business Management and Technical
Assistance Training Programs, by Robert Jay Dilger.
35 U.S. Small Business Administration, Office of Entrepreneurial Development, “Impact Study of Entrepreneurial
Dynamics: Office of Entrepreneurial Development Resource Partners’ Face-to-Face Counseling,” September 2013, p.
10, at http://www.sba.gov/sites/default/files/files/OED_ImpactReport_09302013_Final.pdf.
36 More specifically, there were 5,460 SBDC client respondents (18% response rate); 3,470 SCORE client respondents
(14% response rate); and 340 WBC client respondents (18% response rate). Ibid., p. 8.
37 Ibid., pp. 19-21. For more analysis of these surveys, see CRS Report R41352, Small Business Management and
Technical Assistance Training Programs, by Robert Jay Dilger; and CRS Report R43083, SBA Assistance to Small
Business Startups: Client Experiences and Program Impact, by Robert Jay Dilger.
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reported that SBA resource partners delivered assistance concerning international trade (up from
2% in the 2012 survey).38
Given the few trade-specific questions in this SBA-commissioned survey, it is difficult to draw
conclusions concerning the low shares of international trade-related outcomes among clients of
the largest SBA management and training programs. One interpretation could be that few small
businesses have the desire to export, thus few small businesses sought out counseling on how to
increase exports. Others could claim that the focus of performance management analysis of
international trade programs should be on small business exporters rather than SBA’s small
business clients more generally.
Surveys conducted in 2010 and 2013 jointly by the National Small Business Association (NSBA)
and Small Business Exporters Association (SBEA), two trade groups, reported slightly higher
interaction between exporters and the SBA than the SBA-commissioned study. Still, these surveys
reinforce the notion that small business exporters are seeking out export-related advice from a
variety of different sources.39 Table 6 compares the SBA-relevant information in these surveys.

38 Among the 2012 survey participants, interactions with SBA resource partners most often led to a business plan
(among 34% of survey respondents in 2011), a marketing plan (29%), or a financial strategy (20%). In contrast, only
2% of survey respondents reported that SBA resource partners delivered assistance concerning international trade. No
2012 survey respondents who were clients of WBCs reported that SBA resource partners delivered assistance
concerning international trade. See U.S. Small Business Administration, Impact Study of Entrepreneurial Dynamics:
Office of Entrepreneurial Development Resource Partners’ Face-to-Face Counseling, September 2012, pp. 27 and 65,
at http://www.sba.gov/sites/default/files/files/SBA_Converted_2012_d.pdf.
39 National Small Business Association and Small Business Exporters Association, 2010 Small Business Exporting
Survey, 2010, pp. 7 and 4, at http://www.nsba.biz/docs/2010_small_business_exporting_survey_001.pdf; and 2013
Small Business Exporting Survey, 2013, at http://www.nsba.biz/wp-content/uploads/2013/06/Exporting-Survey-
2013.pdf. For survey methodologies, see the specific reports. The 2010 survey is representative of 250 exporting and
non-exporting members of NSBA and SBEA. The 2013 survey is representative of 500 exporting and non-exporting
members of NSBA and SBEA.
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Table 6. Exporter Survey Responses on SBA International Trade Programs

2010a
2013
SBA-Managed Programs
Am aware of Small Business Development Centers (generally)b 64%
58%
Received exporting advice from a Smal Business Development Center
12%
13%
Received exporting advice from an SBA District Office
NA
8%
Am aware of SBA export lending programs
29%
43%
Taken advantage of SBA export lending programs
12%
3%
Program Partnerships Between SBA and Department of Commerce
Am aware of U.S. Export Assistance Centers
18%
15%
Taken advantage of a U.S. Export Assistance Center in a major U.S. city
26%
10%
Source: National Smal Business Association and Smal Business Exporters Association, 2010 Smal Business
Exporting Survey, 2010, pp. 4 and 7, at http://www.nsba.biz/docs/2010_small_business_exporting_survey_001.pdf;
and 2013 Small Business Exporting Survey, 2013, pp. 5 and 16, at http://www.nsba.biz/wp-content/uploads/2013/06/
Exporting-Survey-2013.pdf.
a. For survey methodologies, see the specific reports. The 2010 survey included responses from 250
exporting and non-exporting members of NSBA and SBEA. The 2013 survey included responses from 500
exporting and non-exporting members of NSBA and SBEA. Only the responses for the exporting smal
businesses are summarized in this table.
b. The 2010 survey distinguished between “exporting assistance” provided by SBDCs and general y SBDC
services. The responses in Table 6 reflect affirmative responses to the latter. When asked if they had heard
of SBDC exporting assistance services, 8% of survey respondents in 2010 responded affirmatively. The 2013
survey did not contain answers to this specific question.
According to the NSBA/SBEA surveys, 64% of small business exporters were aware of SBDCs
in 2010 and 12% of them received exporting advice from SBDCs. In the 2013 survey, 58% of
respondents were aware of SBDCs, and 13% had actually sought out exporting advice from
SBDCs and 8% received exporting advice from an SBA district office. Although awareness of
SBA export lending programs increased from 29% of respondents in 2010 to 43% in 2013, the
share of respondents who actually took advantage of these programs decreased from 12% in 2010
to 3% in 2013 (perhaps due to the end of the STEP program).
Evaluations from the NSBA/SBEA surveys are mixed when comparing SBA programs with other
federal programs. On the one hand, SBDCs were the ninth most used government program by
small business exporters surveyed in 2010, and the second most used program in 2013 (even
though the percentage of respondents who used SBDCs for exporting advice only changed from
12% to 13%).40 On the other hand, presentations and websites from the U.S. Department of
Commerce were used more often by survey respondents in both years than any of the SBA’s
programs.

40 Many non-SBA programs exhibited a significant drop in utilization rates between the 2010 and 2013 NSBA/SBEA
surveys, although it is not apparent why this happened.
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Issues for Congress
This section of the report introduces three policy issues for consideration as Congress looks to the
future size and scope of SBA’s export promotion activities: (1) are there barriers to exporting or
market failures impeding smaller firms from international trade? (2) is there a compelling interest
for the government to promote exports in the name of national trade competitiveness? and (3) are
SBA’s export-promotion policies duplicative of other federal programs? These issues will likely
be framed by the rising concerns about fiscal responsibility and sustained economic recovery.
Small Business Barriers to Exporting and Possible Market Failures
Proponents of federal support for small business exports argue that small businesses face inherent
barriers to participating in international trade. Some of the commonly cited barriers in academic
literature include
• not enough capacity to export,
• not enough information or lack of awareness of services available,
• logistical difficulties in international distribution,
• difficulties in export marketing,
• difficulties in obtaining export financing,
• no perceived demand abroad,
• bureaucratic processes and regulations (i.e., “red-tape”), and
• no desire to export.41
Restricted access to credit is also indicative of a barrier to small business exports. A survey of the
empirical literature suggests that access to finance and the cost of credit do not only pose barriers
to small business trade financing in many countries (including the United States), but also
constrain small businesses more than large firms.42 Smaller firms often find it difficult to obtain
commercial bank financing (especially long-term loans) for a number of reasons, including lack
of collateral, difficulties in proving creditworthiness, inadequate credit history, small cash flows,
higher risk premiums, underdeveloped bank-borrower relationships, and high transaction costs.

41 For a discussion of studies that examine each of these commonly-cited barriers to small business exports, see Kurt J.
Miesenbock, “Small Business and Exporting: A Literature Review,” International Small Business Journal, vol. 6, no. 2
(1988), pp. 42-61; and U.S. International Trade Commission, Small and Medium-Sized Enterprises: Overview of
Participation in U.S. Exports, Investigation No. 332-508, January 2010, pp. 2-15 to 2-16, at http://www.usitc.gov/
publications/332/pub4125.pdf.
42 See Joe Peek, The Impact of Credit Availability on Small Business Exporters, Small Business Administration Office
of Advocacy, April 2013, at http://www.sba.gov/sites/default/files/files/rs404tot%283%29.pdf. For cross-national
studies see International Finance Corporation (IFC), The SME Banking Knowledge Guide, 2010, http://www1.ifc.org/
wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/industries/financial+markets/publications/toolkits/
smebknowledge+guide; Bert Scholtens, “Analytical Issues in External Financing Alternatives for SMEs,” Small
Business Economics, vol. 12 (1999), pp. 137-148; and Thorsten Beck et al., “The Determinants of Financing
Obstacles,” Journal of International Money and Finance, vol. 25, no. 6 (2006), pp. 932-952. However, consistency
among national indicators limits extensive comparisons of SME financing across countries.
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These problems are typically compounded, even relative to larger firms, by events such as the
recent financial crisis.
In general, economic theory suggests export promotion programs increase economic
inefficiencies and reduce national welfare. Specifically, economic theory indicates that in most
instances firms and workers will locate to the most efficient and productive areas to do business
in the long run, without the assistance of government policy. From this perspective, government
policies, such as export promotion programs, that create incentives to engage in one form of
economic activity, potentially at the expense of another, results in net social loss of economic
efficiency—where finite resources are not being used to produce their maximum output for the
lowest cost.43 Economic theory indicates that these policies create a distortion in the market, such
that resources are directed from an area of higher productivity to an area of lower productivity.
On the other hand, most economists believe that some government assistance could be justified in
the presence of a market failure, where the market is unable to efficiently allocate resources on its
own. If there is indeed a presence of a market failure, then there could be an economic basis for
small business export promotion programs (assuming the costs of these programs were less than
aggregate increase in economic activity).
Although studies indicate that smaller firms face barriers to exporting, many of these conditions
are not necessarily indicative of a market failure. Higher risk profiles for small exporters could be
justified by their higher rates of failure, and compounded by their ability to absorb risks
associated with international transactions (e.g., currency fluctuations, transportation costs).
Incomplete information among small businesses concerning the benefits of internationalization
and how to internationalize their business could be indicative of a market failure, though,
particularly if more information could allow small businesses to operate more efficiently and
increase competition.
Small Business Exports and U.S. Trade “Competitiveness”
There has been an ongoing debate among economists and business experts about the theoretical
basis linking trade competitiveness to economic outcomes. Most economic policy experts agree
that the major determinant of economic growth is domestic productivity growth (e.g., net
increases in investment, labor supply, or technology that allows for a more efficient use of capital
or labor). However, there is a divide among other experts concerning the merits of encouraging
the development of sectors that produce tradable goods and services as a means to improve net
exports, increase jobs, and encourage productivity growth.
Proponents of national trade competitiveness theory believe that individual countries have a
compelling policy interest to increase the real (inflation-adjusted) income of their citizens, often
times through promoting growth in specific, tradable sectors.44 Supporters of trade

43 Economists typically view the most efficient means of production as the one that provides the most benefit at the
lowest cost.
44 Some point to persistent trade deficits and the corresponding increase in U.S. international indebtedness as an
indication of a decline in the long-run competitiveness of the United States. However, these conditions do not
necessarily lead to a decline in standards of living (e.g., real GDP). See Lawrence R. Klein, “Components of
Competitiveness,” Science, vol. 241, no. 4863 (July 15, 1988), pp. 308-318; and George N. Hatospoulos, Paul R.
Krugman, and Lawrence H. Summers, “U.S. Competitiveness: Beyond the Trade Deficit,” Science, vol. 241, no. 4863
(July 15, 1988), pp. 299-307.
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competitiveness theory are largely focused on strategies that guide individual businesses in the
marketplace.45 These firm-level strategies are then applied to the national level to inform public
policy. Specifically, government policy can either reduce a business’s profit (e.g., through
national regulations) or increase a business’s bottom-line (e.g., by subsidizing production) such
that domestic firms in the near-term can have a higher financial profit in a head-to-head
“competition” with their international competitors. Loss of competitiveness, these advocates
claim, will lead to the loss of American jobs, the movement of U.S. business operations overseas,
reduced investment by foreign businesses in the United States, etc.
Some view a strong network of small businesses as being critical for U.S. economic
competitiveness in the international market. In part, this notion comes from the belief that small
businesses are the primary source of job creation in the United States, and access to international
markets could further increase the number of jobs created by small businesses. In a related
argument, proponents of small business exports say that small businesses are critical for
innovative, international supply chains. For example, in an article for the Washington Post,
former-SBA Administrator Karen Mills described small businesses supply chain networks with
larger firms and small businesses’ innovations in production as being important in the promotion
of U.S. international economic competitiveness.46
In contrast, economic theory generally does not support international competitiveness as a
national policy goal. A 1994 article by economist Paul Krugman provides an argument against
trade competitiveness theory based on the economic theory of competitive advantage.47 In
summary, Krugman argues that firms might compete with one another, but countries trade with
each other. To support this statement, Krugman says that firms go out of business when they fail
to compete in the marketplace, but countries do not. When a country fails to be “competitive” in a
particular industry, national resources (e.g., capital, labor) are then used toward production in a
different industry. Krugman argues that this process allows for a more efficient allocation of
resources, because countries are guided by market signals to specialize in the industry where they
possess a “comparative advantage” instead of using government resources to provide incentives
for economic activity in an industry where they are relatively less efficient in production. In
summary, Krugman reaffirms traditional economic theories that say that government policies that
promote employment in certain sectors redirects employment from other sectors, and that
productivity gain (in the form of higher wages) for workers in the “higher-valued” industries is
passed along to other workers in the form of higher prices (and lower productivity).48
Even if other countries are providing government incentives for their national small businesses to
export, then some economists would still say that Krugman’s thesis holds. According to this logic,
the United States should not engage in policies that lead to an inefficient allocation of resources
and net loss in national welfare because its trading partners do so. Others expand upon Krugman’s
theoretical reasoning by arguing that the drive for national “competitiveness,” relative to another
country, could be used to justify trade protectionism, restrict capital or labor mobility, increase

45 For a sample of scholars on U.S. competitiveness theory, see Harvard Business School, U.S. Competitiveness
Project, at http://www.hbs.edu/competitiveness/overview.html.
46 Karen Mills, “U.S. competitiveness hinges on the strength of small business suppliers,” The Washington Post, May
6, 2013, at http://www.washingtonpost.com/business/on-small-business/sbas-karen-mills-us-competitiveness-hinges-
on-the-strength-of-small-business-suppliers/2013/05/06/03f517b8-b412-11e2-9a98-4be1688d7d84_story.html.
47 See Paul R. Krugman, “Competitiveness: A Dangerous Obsession,” Foreign Affairs, vol. 73, no. 2 (March/April
1994).
48 Paul R. Krugman, “Proving My Point,” Foreign Affairs, vol. 73, no. 4 (July/August 1994).
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unemployment by sending political signals of support for certain industries, or engage in “beggar-
thy-neighbor” policies of international retaliation that consume national resources.49
Duplication of Services
In the past, Congress has passed legislation to increase export promotion programs targeted
toward small business across various federal agencies. For example, Congress has increased
minimum percentage targets of the Export-Import Bank’s (Ex-Im’s) aggregate loan, guarantee,
and insurance authority for financing exports by small businesses over the past 30 years.50 The
Export-Import Bank Reauthorization Act of 2006 (P.L. 109-438) required the President of Ex-Im
to establish and maintain a Small Business Division. As previously mentioned, Congress elevated
the goal of export promotion, within SBA, when it established an Assistant Administrator to head
the Office of International Trade in the Small Business Jobs Act of 2010 (P.L. 111-240).
More recently, though, the possible overlap and duplication of services across federal agencies
that support export promotion programs for small business has become a concern for some
Members of Congress. These concerns are largely driven by desires for more efficient delivery of
government services, reductions in spending, and elimination of duplicative programs.
The Government Accountability Office (GAO) identified overlap of services between SBA’s
export promotion activities and other federal agencies. GAO has compared SBA’s programs with
those at Ex-Im and various parts of the Department of Commerce.51 Particularly, GAO noted that
SBDCs and Commerce provide some similar one-on-one counseling services to small businesses,
and SBA and Ex-Im offer overlapping loan guarantee programs through similar lending
institutions. SBA and Commerce responded to these claims by saying that each agency tends to
target different audiences by specializing in areas where they have more experience. For example,
Commerce works more with existing small business exporters to expand their range of products
and services to more markets, whereas SBA works more with small businesses that are looking to
begin to export.
After conducting interviews with government officials and private-sector representatives, a 2013
GAO report concluded that overlap in services led to confusion for some small businesses. SBA
and Commerce noted that both agencies have begun to clarify counseling roles and
responsibilities through an interagency communiqué.52 GAO recommended that SBA consult with
Ex-Im and Commerce more closely to provide specific guidance among the agencies’ export
promotion counseling to small business, and to identify ways to share client information. SBA

49 Rudolf Scharping, “Rule-Based Competition,” Foreign Affairs, vol. 73, no. 4 (July/August 1994).
50 The Supplemental Appropriations Act, 1984 (P.L. 98-181) required Ex-Im to make available for FY1986 and
thereafter not less than 10% of its aggregate loan, guarantee, and insurance authority for financing exports by small
businesses. The Export-Import Bank Reauthorization Act of 2002 (P.L. 107-189) increased this minimum annual
percentage to 20% in subsequent fiscal years. Ex-Im uses SBA’s size standards methodology to determine whether a
company qualifies as a small business.
51 See Appendix I in U.S. Government Accountability Office, 2013 Annual Report: Actions Needed to Reduce
Fragmentation. Overlap, Duplication, and Achieve Other Financial Benefits, GAO-13-279SP, April 2013, p. 232, at
http://www.gao.gov/assets/660/653604.pdf; and U.S. Government Accountability Office, Small Business
Administration Needs to Implement Its Expanded Role, GAO-13-217, January 2013, at http://www.gao.gov/assets/660/
651685.pdf.
52 U.S. Government Accountability Office, Small Business Administration Needs to Implement Its Expanded Role,
GAO-13-217, January 2013, at http://www.gao.gov/assets/660/651685.pdf.
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has been responsive to some of GAO’s concerns, but it has noted that legislation generally
prevents SBA from sharing specific client information outside of the agency without prior
consent.53 GAO also recommended that SBA and Ex-Im 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. In any case, co-location of some of these services (in the form of U.S.
Export Assistance Centers) could help to reduce the burdens on small businesses in obtaining
comprehensive, export counseling assistance.
Improving export program efficiencies have been the focus of several recent bills and could also
become a larger issue if Congress grants the President the authority to reorganize certain
business- and trade-related offices (and entire agencies) across the federal government under a
single agency. Most recently, the President has reiterated his call for this authority in his FY2015
budget recommendation.54 SBA has been named as one agency whose trade-related functions
could be consolidated under the President’s proposal.
In the 112th Congress, the Reforming and Consolidating Government Act of 2012 (S. 2129)
would have provided the President with much of this authority.
In the 113th Congress, several bills have been introduced to help small businesses exporters,
including the following:
• The Export Coordination Act of 2013 (H.R. 1909) would help to clarify the role
of each federal agency in each part of the export process.
• The TRADE (Transparent Rules Allow Direct Exporting) for Small Businesses
and Jobs Act (H.R. 1916) would help small businesses increase their exports and
enter new markets by helping companies better understand foreign regulations
and directing trade agencies to monitor and collect up-to-date information on
changes to tariff and non-tariff laws, regulations, and practices, and display them
in a clear and easy to read format.55
• The Small Business Export Growth Act (S. 1179) would encourage greater
coordination between state and federal resources by creating a working group on
the Trade Promotion Coordinating Committee (TPCC) to streamline efforts
among state and federal export promotion and assistance agencies, identify
opportunities to consolidate unnecessary government offices, and require SBA to
conduct greater export outreach to small businesses.
• The State Trade Coordination Act of 2013 (H.R. 1926) would require increase
representation and integration of state trade programs into federal trade

53 Ibid., p. 33.
54 Office of Management and Budget, Fiscal Year 2015 Budget of the U.S. Government, March 2014, p. 39, at
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/21st_century.pdf. For more analysis on
executive branch reorganization initiatives, see CRS Report R41841, Executive Branch Reorganization Initiatives
During the 112th Congress: A Brief Overview, by Henry B. Hogue; CRS Report R42555, Trade Reorganization:
Overview and Issues for Congress, by Shayerah Ilias Akhtar; and CRS Report R42852, Presidential Reorganization
Authority: History, Recent Initiatives, and Options for Congress, by Henry B. Hogue.
55 For a more detailed summary of each piece of legislation, see House Small Business Committee Chairman Sam
Graves (MO), “Committee Members Introduce No-Cost Legislation To Help Small Business Enter Trade Market,”
press release, May 9, 2013, at http://smallbusiness.house.gov/news/documentsingle.aspx?DocumentID=333026.
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promotion programs, and establish information sharing and reporting metrics
between the states and the federal government.
As of the publication date of this report, only the State Trade Coordination Act of 2013 (H.R.
1926) has been reported out of committee. On June 26, 2013, the House Foreign Affairs
Committee’s Subcommittee on Terrorism, Nonproliferation and Trade ordered (by voice vote)
H.R. 1926 to be reported to the House floor.56

56 For media coverage of the voice, see Elham Khatami, “Export Promotion Bills Backed by Panel,” CQ Roll Call, June
26, 2013, at http://www.cq.com/doc/committees-2013062600309442?wr=eFF6UlQqRXM3azJVd1NSLTdJR1Fjdw.
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Appendix. A Brief Description of SBA Loan
Programs Used to Support Export Activities
•
7(a) Loan Program: SBA’s flagship loan guaranty program for working capital.
•
SBAExpress: Expedited review process for 7(a) with more restrictive loan limits.
•
Patriot Express: Expedited review process with higher maximum loan amounts and lower maximum interest
rates than SBAExpress. Eligible only to veterans, active-duty military members, reservists, and their spouses.
•
Export Express: Similar to SBAExpress. Eligible to businesses that intend to internationalize or expand their
current export operations.
•
Export Working Capital Program: Short-term working capital loans for exporters.
•
International Trade Export Program: Term loan for permanent working capital related to international trade.
•
Community Advantage (CA): Targets community-based and mission-based financial institutions.
•
Community Express: Expedited review process for CA program with more restrictive loan limits.
•
Small Loan Advantage (SLA): Expedited review process for smal er loans in underserved communities.
•
Preferred Lenders Program (PLP): SBA delegates the final credit decision and most servicing and liquidation
authority and responsibility to carefully selected PLP lenders.
•
Rural Lenders Program (RLA): Streamlined review process for smaller loans made by rural lenders.
•
504/CDC Loan Program: Provides loan guarantees to Certified Development Companies (CDCs) for long-
term fixed-asset loans (i.e., non-working capital). Has job creation requirements.
•
Accredited Lenders Program (ALP): SBA gives certain lenders increased authority to process, close, and service
504/CDC loans, and provides expedited processing of loan approval and servicing actions.
•
Certified Lenders Program (CLP): SBA designates qualified CDCs as Premier CLP CDCs and delegates to them
increased authority to process, close, service, and liquidate 504/CDC loans.
•
504/CDC Refinancing Option: Al owed refinancing of existing 504/CDC loans for purposes beyond business
expansion (program ended in Sept. 2012)
•
Gulf Opportunity (GO) Zone: Provides disaster loans for small business owners affected by Hurricane
Katrina.
For more information, see CRS Report RL33243, Small Business Administration: A Primer on Programs and Funding, by
Robert Jay Dilger and Sean Lowry; and Small Business Administration, Loan Program Quick Reference Guide, June 2012,
at http://www.sba.gov/content/loan-program-quick-reference-guide.

Author Contact Information

Sean Lowry

Analyst in Public Finance
slowry@crs.loc.gov, 7-9154


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