Small Business Administration Trade and Export Promotion Programs

January 22, 2014 – May 24, 2022 R43155

Small Business Administration
Trade and Export Promotion Programs
Updated May 24, 2022
Congressional Research Service
https://crsreports.congress.gov
R43155

Small Business Administration Trade and Export Promotion Programs

Summary
Approximately 166,384 small businesses in the United States currently export, accounting for
about 26% of all U.S. exports ($341 billion of $1.32 trillion) and about 96% of all exporters
(166,384 of 173,459 exporters). With roughly three-quarters of world purchasing power and
almost 95% of world consumers living outside U.S. borders, more attention is being paid to small
business export promotion programs’ potential economic benefits for small businesses and
national economic output. In addition, some Members of Congress believe the contributions of
small businesses to commercial innovation and economic opportunities for firms and workers
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 guaranty 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
associate administrator position to lead OIT and report directly to the SBA administrator. The act
also authorized the precursor to what is now known as the “State Trade Expansion Program”
(STEP), which provides states and territories grants to assist small business trade promotion.
STEP was appropriated $20.0 million for FY2022.
In FY2021, SBA’s export-related loans amounted to approximately $856.8 million
(approximately 1.9% of the SBA’s total business loan portfolio). Most of SBA’s export-related
loans occur through SBA’s Export Express, Export Working Capital (EVCP), and International
Trade loan guarantee programs. Although not specifically targeted at exports, SBA’s 7(a) and
504/CDC loan guarantee programs also provide loans to small business exporters.
This report examines the history, role, and scope of SBA’s export promotion activities and OIT’s
creation. SBA output data and qualitative data from other sources are presented to assess SBA’s
assistance to small business exporters. This report concludes with a discussion of the following
three policy issues for Congress:
 Are there market barriers impeding smaller firms from exporting and, if so, what
should the federal government do, if anything, to address these barriers?
 Is there a compelling governmental interest in promoting exports in the name of
national “competitiveness”?
 Are SBA’s export promotion programs duplicative of other federal programs,
and, if so, what should the federal government do, if anything, to address this
duplication?

Congressional Research Service

Small Business Administration Trade and Export Promotion Programs

Introduction
Some Members of Congress believe the contributions of small businesses to commercial
innovation and economic growth could be enhanced through greater access to growing
international markets. According to U.S. Census Bureau data, 166,384 small businesses (i.e.,
firms with fewer than 500 employees) in the United States currently export, accounting for about
25.8% of all U.S. exports ($341 billion of $1.32 trillion) and 95.9% of all U.S. exporters (166,384
of 173,459 exporters).1 About 3% of small businesses (with employees) in the United States
export.2 With roughly three-quarters of world purchasing power and almost 95% of world
consumers living outside U.S. borders, more attention is being paid to the potential of small
business programs to increase employment in the export sector.3
Advocates of export promotion programs 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 policymakers 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.4 More recent studies indicate that small
business owners have different aspirations concerning the growth of their firms and that small,
new firms (i.e., startups) are more likely to expand than small businesses generally.
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
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.
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 Expansion Program (STEP) grant
program (previously known as the State Trade and Export Promotion (STEP) grant program). The
report also provides SBA output data and qualitative performance data from other sources.

1 U.S. Census Bureau, “ABS – U.S. Exporting Firms by Demographics 2020 Table 3: Employer Firms by Exporting
Status: Employment Size of Firm, Sex, Ethnicity, Race, and Veteran Status: 2019,” at
https://www.census.gov/data/tables/2019/econ/abs/2019-abs-exporting-firms.html.
2 In 2019, there were 5,751,036 employer firms with fewer than 500 employees. See U.S. Census Bureau, “2020
Annual Business Survey (ABS)—Characteristics of Businesses: Sex, Ethnicity, Race, Veteran Status, and Employment
Size of Firm, 2019,” at https://data.census.gov/cedsci/table?q=ab1900%2a&tid=ABSCB2019.AB1900CSCB04&
hidePreview=true&nkd=QDESC~B01. In addition, in 2018 (the latest available data) there were 26.5 million
nonemployer firms in the United States. Nonemployer firms have no paid employees and are subject to federal income
tax. These firms average less than 4% of all sales and receipts nationally and are excluded from most other Census
Bureau business statistics. Presumably, relatively few nonemployer firms are exporters. See U.S. Census Bureau, “NES
Tables 2018,” at https://data.census.gov/cedsci/table?q=NONEMP2018.NS1800NONEMP&tid=
NONEMP2018.NS1800NONEMP&hidePreview=true.
3 Office of the United States Trade Representative, Economy and Trade, at https://ustr.gov/issue-areas/economy-trade.
4 For additional information and analysis 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.
5 For further information and analysis of the theoretical arguments and empirical literature on small business and job
creation, see CRS Report RL32254, Small Business Tax Benefits: Current Law, by Gary Guenther; and CRS Report
R41523, Small Business Administration and Job Creation, by Robert Jay Dilger.
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Lastly, the report discusses three policy issues for Congress. 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 the promotion of economic
opportunities for firms and employees.
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
opportunities. SBA also participates in the regional network of U.S. Export Assistance Centers,
which are managed by the Department of Commerce’s (DOC’s) International Trade
Administration.6
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. This
export-oriented focus is consistent with other federal agencies.7
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 for trade-
related counseling provided through SBA’s management and training programs.
Table 1 provides OIT international trade promotion program costs from FY2007 through the
FY2023 presidential budget request and STEP program costs from FY2012 through the FY2023
presidential budget request. Total program costs include obligations covering the full cost for
administering these programs. 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).
STEP appropriations from FY2012 through the FY2023 presidential budget request are also
presented.

6 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 I.
Akhtar.
7 The economic theory that could support export promotion programs is discussed in the “Small Business Barriers to
Exporting and Possible Market Failures” section of this report. Another argument often cited for export promotion
programs is that exports support job creation in the United States. However, comparative advantage theory in
economics indicates that 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.
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Table 1. SBA’s Office of International Trade and State Trade Expansion Program
(STEP), Total Costs and Appropriations, FY2007-FY2023
($ in Thousands)
OIT International
Trade Promotion
Fiscal Year
Program Costsa
STEP Costs
STEP Appropriation
2023 request
$15,936
$27,477
$19.500
2022 estimate
$13,703
$27.336
$20.000
2021
$11,137
$17,184
$19.500
2020
$11,052
$20,139
$19.000
2019
$14,037
$20,139
$18.000
2018
$13,396
$19,708
$18.000
2017
$11,451
$25,155
$18.000
2016
$11,140
$26,527
$18.000
2015
$9,025
$19,563
$17.400
2014
$10,586
$9,462
$8.000
2013
$9,543
$1,681
$0.000
2012
$8,943
NA
$30.000
2011
$7,681
NA
$30.000
2010
$8,016
—
—
2009
$4,660
—
—
2008
$4,154
—
—
2007
$5,258
—
—
Sources: U.S. Small Business Administration, Congressional Budget Justification and Annual Performance Report,
various years, at https://www.sba.gov/about-sba/sba-performance/performance-budget-finances/congressional-
budget-justification-annual-performance-report; P.L. 111-240, the Small Business Jobs Act of 2010; P.L. 113-76,
the Consolidated Appropriations Act, 2014; P.L. 113-235, the Consolidated and Further Continuing
Appropriations Act, 2015; P.L. 114-113, the Consolidated Appropriations Act, 2016; P.L. 115-141, the
Consolidated Appropriations Act, 2018; P.L. 116-6, the Consolidated Appropriations Act, 2019; P.L. 116-93, the
Consolidated Appropriations Act, 2020; P.L. 116-260, the Consolidated Appropriations Act of 2021; and P.L.
117-103, the Consolidated Appropriations Act, 2022.
a. These nominal 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).
In terms of scale, OIT and STEP’s combined total program costs of $41.0 million in FY2022
accounts for approximately 0.14% of SBA’s total program obligations for the year (not including
disaster assistance).8
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

8 SBA’s total program obligations are approximately $46.6 billion in FY2022 ($16.7 billion of which is for disaster
assistance and $29.9 billion for all other programs). See SBA, FY2023 Congressional Budget Justification FY2021
Annual Performance Report, pp. 21-22, at https://www.sba.gov/document/report-congressional-budget-justification-
annual-performance-report.
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Small Business Administration Trade and Export Promotion Programs

Access. The Small Business Jobs Act of 2010 (P.L. 111-240) raised the office’s profile within the
SBA by requiring the SBA administrator, within 90 days of enactment (by December 26, 2010),
to appoint an AA for International Trade who reports directly to the SBA Administrator.
SBA is one of several federal agencies that assist in the promotion of small business exports and
in export promotion more generally.9 SBA’s website provides a table of federal programs that
help to finance small business exports.10 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
export promotion. The TPCC then proposes a unified export promotion budget to the President.
The TPCC is composed of 20 member agencies, including DOC, Export-Import Bank, SBA,
Department of State, U.S. Trade Representative, and Department of the Treasury. The Secretary
of Commerce chairs the TPCC.11
SBA’s Export Promotion-Focused Loan Programs
SBA identifies small businesses interested in export promotion through a combination of
informational and financial programs. Technically speaking, all of the SBA’s loan programs can
be used by small businesses looking to begin exporting or expand their current exporting
operations. Indeed, as discussed below, many of SBA’s loan programs contribute to this mission.
SBA has three loan programs that specifically focus on export promotion:
 Export Express loan program, which provides working capital or fixed asset
financing for small businesses that will begin or expand exporting;12
 Export Working Capital (EWCP) loan program, which provides financing to
support export orders or the export transaction cycle, from purchase order to final
payment;13 and
 International Trade loan program, which provides long-term financing to
support small businesses that are expanding because of growing export sales or

9 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 I. Akhtar
10 SBA, “Export products,” at https://www.sba.gov/managing-business/exporting/export-loans/financing-your-small-
business-exports.
11 For more information, see CRS Report R41495, U.S. Government Agencies Involved in Export Promotion: Overview
and Issues for Congress, coordinated by Shayerah I. Akhtar.
12 The Export Express program was started as a pilot program in 1998. It was provided statutory status by P.L. 111-240,
the Small Business Jobs Act of 2010. See SBA, “Export Express, Export Working Capital, and International Trade
Loan Programs,” 84 Federal Register 48807, September 17, 2019.
13 The Export Working Capital Program (EWCP) was started as a pilot program on October 1, 1994. See SBA, “Pilot
Export Working Capital Program,” 59 Federal Register 48460, September 21, 1994.
EWCP’s statutory provisions are in Sections 7(a)(14) and 7(a)(2)(D) of the Small Business Act, as amended (15 U.S.C.
§636(a)(14) and 15 U.S.C. §636(a)(2)(D)). SBA EWCP regulations are at 13 C.F.R. §120.340 to 13 C.F.R. §120.344.
P.L. 104-208, the Omnibus Consolidated Appropriations Act, 1997 (Division D—Small Business Programs
Improvement Act of 1996), added the program’s name to the Small Business Act.
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have been adversely affected by imports and need to modernize to meet foreign
competition.14
Table 2 summarizes the key features of SBA’s three export promotion-focused loan programs.
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
Must be an eligible, for-profit
Must be an eligible, for-profit
Qualifies?
demonstrate that the loan will
business; meet SBA size
business; meet SBA size standards;
enable it to enter a new export
standards; and show “good
and show “good character,” credit,
or expand in an existing export
character,” credit,
management, and ability to repay
market. Business must have been
management, and ability to
(same as 7(a) loan program).
in operation for at least 12
repay (same as 7(a) loan
Applicants must also be engaged or
months (although not necessarily
program).
preparing to engage in international
in exporting).
Applicants must also
trade or adversely affected by
demonstrate need for short-
competition from imports.
term, working capital for
exporting.
Use of
Revolving lines of credit (up to
Short-term, working-capital
Term loans for permanent working
Proceeds
seven years in maturity) or for a
loans to support export
capital (e.g., raw materials),
term loan for export
transactions. May be
equipment, facilities, land and
transactions (same as 7(a) loan
transaction based or asset
buildings, and debt refinance
program), including support for
based. Loan proceeds may be
related to international trade.
standby letters of credit; export
used to acquire inventory; to
development expenses, including
pay the manufacturing costs of
trade show participation; and
goods for export; purchase
translation of product literature.
goods or services for export;
support standby letters of
credit; for pre-shipment
working capital; and for post-
shipment foreign accounts
receivable financing.
Maximum
Gross loan amount limited to
Gross loan amount limited to
The gross loan amount limited to
Loan
$500,000 per loan. SBA guaranty
$5 million per loan. SBA
$5 million per loan. SBA guaranty
Amount
amount limited to $375,000 to
guaranty amount limited to
amount limited to $4.5 million to
one borrower (and any affiliates). $4.5 million to one borrower
one borrower (and any affiliates).
(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.
Percentage 90% guaranty for loans of
90% guaranty not to exceed
90% guaranty not to exceed $4.5
of
$350,000 or less;
$4.5 million.
million (up to $4 million maximum
Guaranty
75% guaranty for loans greater
guaranty for working capital).
than $350,000.

14 The International Trade loan program’s statutory provisions are in Sections 7(a)(16) and 7(a)(2)(E) of the Small
Business Act, as amended (15 U.S.C. §636(a)(16) and 15 U.S.C. §636(a)(2)(E)). SBA International Trade loan
program regulations are at 13 C.F.R. §120.345 to 13 C.F.R. §120.349.
P.L. 87-550, To amend the Small Business Act [1962], provided SBA statutory authorization “to assist any firm to
adjust to changed economic conditions resulting from increased competition from imported articles.”
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Small Business Administration Trade and Export Promotion Programs

Key
Export Express Loan
Export Working Capital
International Trade Loan
Feature
Program
Program
Program
Maturity
Terms up to 25 years for fixed
Generally 1 year or less, but
Up to 25 years.
assets and up to 7 years for
may go up to 3 years with
revolving lines of credit for
annual renewals.
working capital (same as
SBAExpress loan program).
Maximum
For fixed rate loans, lenders and
No SBA maximum interest
For fixed rate loans, lenders and
Interest
borrowers negotiate the interest
rate cap, but SBA monitors
borrowers negotiate the interest
Rates
rate, but the rate must be
for “reasonableness.”
rate, but the rate must be
reasonable and may not exceed:
reasonable and may not exceed:
Loans of $25,000 or less: prime
Loans of $25,000 or less: prime +
+ 800 basis points;
800 basis points;
Loans over $25,000 to $50,000:
Loans over $25,000 to $50,000:
prime + 700 basis points;
prime + 700 basis points;
Loans over $50,000 to $250,000:
Loans over $50,000 to $250,000:
prime + 600 basis points; and
prime + 600 basis points; and
Loans over $250,000: prime +
Loans over $250,000: prime + 500
500 basis points (same as 7(a)
basis points.
loan program).
For variable rate loans, lenders and
For variable rate loans, lenders
borrowers negotiate the interest
and borrowers negotiate the
rate, but the rate may not exceed:
interest rate, but the rate may
Loans less than 7 years and
not exceed:
$25,000 or less: the base rate +
Loans of $50,000 or less: prime
4.25 percentage points;
+ 6.5%; and
Loans less than 7 years and over
Loans over $50,000: prime +
$25,000 but not exceeding
4.5% (same as SBAExpress loan
$50,000: the base rate + 3.25
program).
percentage points;
Loans less than 7 years and over
$50,000: the base rate + 2.25
percentage points;
Loans 7 years or longer and
$25,000 or less: the base rate +
4.75 percentage points;
Loans 7 years or longer and over
$25,000 but not exceeding
$50,000: the base rate + 3.75
percentage points; and
Loans 7 years or longer and over
$50,000: the base rate + 2.75
percentage points (same as 7(a)
loan program).
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Small Business Administration Trade and Export Promotion Programs

Key
Export Express Loan
Export Working Capital
International Trade Loan
Feature
Program
Program
Program
FY2022
Annual Servicing Fee:
Annual Servicing Fee:
Annual Servicing Fee:
SBA Fees
Loans of $350,000 or less: 0.0%;
Loans of $350,000 or less:
Loans of $350,000 or less: 0.0%;
Charged
and
0.0%; and
and
on the
Amount
Loans over $350,000: 0.49%.
Loans over $350,000: 0.49%.
Loans over $350,000: 0.49%.
Guarantied Upfront Guaranty Fee:
Upfront Guaranty Fee:
Upfront Guaranty Fee:
Loans with maturity that exceeds Loans of $350,000 or less,
Loans with maturity that exceeds
12 months and $350,000 or less:
regardless of maturity: 0.0%;
12 months and $350,000 or less:
0.0%; and
Loans over $350,000 with a
0.0%; and
Loans with maturity that exceeds maturity of 12 months or less:
Loans with maturity that exceeds
12 months and over $350,000:
0.25%;
12 months and over $350,000:
2.77%.
Loans over $350,000 with a
2.77%.
Loans with maturities of 12
maturity of 13 months to 24
Loans with maturities of 12 months
months or less and $350,000 or
months: 0.525%; and
or less and $350,000 or less: 0.0%;
less: 0.0%; and
Loans over $350,000 with a
and
Loans with maturities of 12
maturity of 25 months to 36
Loans with maturities of 12 months
months or less and over
months: 0.80%.
or less and over $350,000: 0.25%.
$350,000: 0.25%.
Sources: 13 C.F.R. §120.214; 13 C.F.R. §120.340-13 C.F.R. §120.349; SBA, “Maximum Allowable 7(a) Fixed
Interest Rates,” 83 Federal Register 55478, November 6, 2018; SBA, “Express Loan Programs; Affiliation
Standards,” 85 Federal Register 7625, February 10, 2020; SBA, Quick Overview of SBA Loan Guaranty Programs,
October 2020, at https://www.sba.gov/sites/default/files/resource_files/Loan_Chart_October_2020_-_FY21.pdf;
and SBA, “SBA Information Notice: 7(a) Fees Effective October 1, 2021,” September 7, 2021, at
https://www.sba.gov/document/information-notice-5000-818641-7a-fees-effective-october-1-2021.
Notes: The base interest rate is one of the following: the prime rate, the 30-day London Interbank Offered Rate
(LIBOR) plus 3 percentage points, or the SBA optional Peg rate.
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 program shares several of the characteristics of the standard 7(a) loan guaranty
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 (both of which
reduce SBA’s exposure to potential losses).15 Similarly, the Export Express program shares
several characteristics with the standard International Trade loan program, such as an expedited
approval process in exchange for a lower maximum loan amount ($500,000 compared with $5
million) and a lower percentage of guaranty.16
Fee Waivers and Reductions
From time-to-time, the SBA has exercised its authority to reduce its fees to encourage lending to
specific types of small businesses or for specific types of loans (e.g., for veterans, borrowers in

15 For additional information and analysis of the SBAExpress and 7(a) loan guarantee programs, see CRS Report
R41146, Small Business Administration 7(a) Loan Guaranty Program, by Robert Jay Dilger.
16 The percentage of guaranty 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 (it has no limit on loans compared with SBA’s limit of $5 million). For more
information comparing these programs, see U.S. Government Accountability Office (GAO), 2013 Annual Report:
Actions Needed to Reduce Fragmentation. Overlap, Duplication, and Achieve Other Financial Benefits, GAO-13-
279SP, April 2013, p. 112, at http://www.gao.gov/assets/660/653604.pdf.
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rural areas, smaller loans, etc.).17 Congress has also provided fee relief. For example, the Veterans
Entrepreneurship Act of 2015 (P.L. 114-38) authorized and made permanent the SBA’s practice
of waiving the SBAExpress loan program’s one time, up-front guaranty fee for veterans (and
their spouse) beginning on or after October 1, 2015, except during any upcoming fiscal year for
which the President’s budget, submitted to Congress, includes a subsidy cost for the 7(a)
program, in its entirety, that is above zero.18 P.L. 116-136, the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act), among other provisions, eliminated the zero subsidy
requirement to waive SBAExpress loan fees for veterans.
Most recently, Congress waived fees for both the 7(a) loan guarantee program (which includes
SBA’s three export promotion-focused loan programs) and the 504/Certified Development
Company (504/CDC) loan guarantee program in FY2021 as part of its effort to assist small
businesses adversely affected by the COVID-19 pandemic (P.L. 116-260, the Economic Aid to
Hard-Hit Small Businesses, Nonprofits, and Venues Act (Division N, Title III of the Consolidated
Appropriations Act, 2021)).
Other SBA Lending Programs of Interest
In addition to the SBA’s three export promotion-focused loan programs, other types of 7(a) loans
and 504/CDC loans can also be used to support small business exporters. As shown in Table 3,
the amount of SBA export-related loans has generally declined in recent years.
Table 3. SBA Export-Related Loan Approval Amount, FY2015-FY2021
($ in millions)
Export
Express,
Export
Total SBA
Working
Export-
Capital
Related
Program,
Other
Loans as a
and
7(a)
Total 7(a)
504/CDC
Total SBA
% of Total
International
Export-
Export-
Export-
Export-
SBA
Trade Loan
Related
Related
Related
Related
Business
Fiscal Year
Program
Loans
Loans
Loans
Loans
Loans
2021
$506.0
$196.8
$702.8
$154.0
$856.8
1.91%
2020
$602.0
$250.9
$852.9
$105.4
$958.3
3.38%

17 For example, the SBA waived 50% of the up-front, one-time guaranty fee on all non-SBAExpress 7(a) loans of
$150,001 to $5 million for veterans in FY2015 and FY2016; 50% of the up-front, one-time guaranty fee on all non-
SBAExpress 7(a) loans of $150,001 to $500,000 for veterans in FY2017; and 50% of the up-front, one-time guaranty
fee on all non-SBAExpress 7(a) loans of $125,001 to $350,000 for veterans in FY2018.
In addition, the SBA waived its annual service fee for all 7(a) loans of $150,000 or less approved from FY2014 through
FY2016 (the annual service fee for other small businesses was 0.52% in FY2014, 0.519% in FY2015, and 0.473% in
FY2016); waived the annual service fee for 7(a) loans of $150,000 or less made to small businesses located in a rural area or a
HUBZone in FY2019 (the annual service fee for other small businesses was 0.55% in FY2019); waived the up-front, one-time
guaranty fee for all 7(a) loans of $150,000 or less approved from FY2014 through FY2017; waived the up-front, one-time
guaranty fee for all 7(a) loans of $125,000 or less approved in FY2018; and reduced the up-front, one-time guaranty fee for
loans made to small businesses located in a rural area or a HUBZone from 2% to 0.6667% of the guaranteed portion of the
loan in FY2019.
18 For additional information and analysis, see CRS Report R42695, SBA Veterans Assistance Programs: An Analysis
of Contemporary Issues, by Robert Jay Dilger and Sean Lowry.
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Export
Express,
Export
Total SBA
Working
Export-
Capital
Related
Program,
Other
Loans as a
and
7(a)
Total 7(a)
504/CDC
Total SBA
% of Total
International
Export-
Export-
Export-
Export-
SBA
Trade Loan
Related
Related
Related
Related
Business
Fiscal Year
Program
Loans
Loans
Loans
Loans
Loans
2019
$659.0
$298.0
$957.0
$68.2
$1,025.2
3.64%
2018
$736.0
$321.5
$1,057.5
$77.6
$1,135.1
4.48%
2017
$660.0
$1,054.2
$1,714.2
$74.9
$1,789.1
5.87%
2016
$710.0
$618.3
$1,328.3
$196.2
$1,524.5
5.28%
2015
$731.0
$528.2
$1,259.2
$209.6
$1,468.8
5.27%
Sources: U.S. Small Business Administration, FY2022 Congressional Justification and FY2020 Annual Performance
Report, p. 48, at https://www.sba.gov/document/report-congressional-budget-justification-annual-performance-
report; U.S. Small Business Administration, FY2023 Congressional Budget Justification FY2021 Annual Performance
Report, p. 60, at https://www.sba.gov/document/report-congressional-budget-justification-annual-performance-
report; and U.S. Small Business Administration, “Weekly Approvals Report with data as of 9/30 each FY:
September 30, 2021,” at https://www.sba.gov/sites/default/files/2021-10/WebsiteReport_asof_20210930.pdf.
In terms of scale, SBA export-related loans accounted for about 1.92% of 7(a) loan amounts,
1.87% of 504/CDC loan amounts, and 1.91% of total SBA business loan amounts in FY2021.19
Export-Related Aspects of SBA 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 interagency 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 SCORE (previously known as the Service Corps of Retired Executives).20
In addition, SBA partners with other agencies to provide small business export counseling. For
example, SBA provides a small business counselor training certification program and engages in
counseling services to small business in partnership with DOC-led U.S. Export Assistance
Centers (USEACs). In FY2021, SBA trained 5,130 lenders and counseled 2,803 small business
owners on export finance.21

19 SBA, “Weekly Approvals Report with data as of 9/30 each FY: September 30, 2021,” at https://www.sba.gov/sites/
default/files/2021-10/WebsiteReport_asof_20210930.pdf.
20 SBDCs provide a vast array of technical assistance to small businesses and aspiring entrepreneurs. Women’s
Business Centers (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.
21 SBA, FY2023 Congressional Budget Justification FY2021 Annual Performance Report, p. 59, at
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SBA Management and Training Programs’ Survey Responses
SBA’s Office of Entrepreneurial Development used to sponsor an annual survey of a stratified
random sample of clients participating in the SBA’s three largest management and training
programs: Small Business Development Centers (SBDCs), Women’s Business Centers (WBCs),
and SCORE (previously known as the Service Corps of Retired Executives).22 The survey asked
questions about several aspects of the client’s experiences with these programs, including the
programs’ impact on their staffing decisions and management practices. The last survey,
published in September 2013, 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.”23 Of the
58,137 surveys sent, researchers received 9,459 responses (a 16% response rate).24 The survey
labels these three SBA-supported entities as “resource partners.”
In general, the surveys indicated that these programs assisted small businesses at all stages of
development. They also indicated that most of the small business owners who participated in
these programs and responded to the survey found the programs useful and changed their
management practices or strategies as a result of their participation in the programs.25
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% of survey respondents), a marketing plan
(45%), or changes to general management (35%). In contrast, 4% of survey respondents reported
that SBA resource partners delivered assistance concerning international trade (up from 2% in the
2012 survey).26
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. An alternative explanation could be that the focus of performance management

https://www.sba.gov/document/report-congressional-budget-justification-annual-performance-report.
22 For more information and analysis of these programs, see CRS Report R41352, Small Business Management and
Technical Assistance Training Programs, by Robert Jay Dilger.
23 SBA, 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 (hereinafter, SBA, “Impact Study of Entrepreneurial
Dynamics, 2013”).
24 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). SBA, “Impact Study of Entrepreneurial
Dynamics, 2013,” p. 8.
25 SBA, “Impact Study of Entrepreneurial Dynamics, 2013,” 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.
26 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 SBA, 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.
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analysis of international trade programs should be on small business exporters rather than SBA’s
small business clients more generally.
State Trade Expansion Program (STEP) Grants
P.L. 111-240, the Small Business Jobs Act of 2010, authorized SBA to establish a three-year State
Trade and Export Promotion (STEP) pilot grant initiative. P.L. 114-125, the Trade Facilitation and
Trade Enforcement Act of 2015, renamed the initiative the State Trade Expansion Program
(STEP) and provided STEP explicit statutory authorization.
Congress initially provided STEP appropriations for two years: $30 million in FY2011 and $30
million in FY2012. Congress did not fund the program in FY2013. Congress provided STEP $8.0
million in FY2014, $17.4 million in FY2015, $18.0 million in each of FY2016 through FY2019,
$19.0 million in FY2020, $19.5 million in FY2021, and $20 million in FY2022 (see Table 1).
The SBA awarded 51 STEP awards in FY2011, 52 in FY2012, 24 in FY2014, 40 in FY2015, 44
in FY2016 and FY2017, 47 in FY2018, 41 in FY2019, 48 in FY2020, and 29 in FY2021.27
The SBA is 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.28 In most cases, the SBA provides 75% of total project costs and states provide
25% of the sum of the federal award and the recipient match amount (33.3%). However, for the
top three states in value of exports as determined by the U.S. Census Bureau’s export data
(California, Texas, and New York), the SBA provides 65% of total project costs and these states
provide 35% of the sum of the federal award and the recipient match amount (53.8%).29
STEP awards are currently for two years, a base year and an option year. The option year is at the
SBA’s discretion, but is routinely awarded “after taking into consideration satisfactory
performance and use of prior year funding.”30 STEP grant amounts range from a minimum of
$100,000 each in the base and option year to a maximum of $900,000 each in the base and option

27 SBA, Office of International Trade, “State Trade and Export Promotion (STEP) Program Fact Sheet,” at
https://www.sba.gov/sites/default/files/files/FACT%20SHEET%20STEP%20PROGRAM%20(1-3-2013).pdf; SBA,
FY2016 Congressional Budget Justification and FY2014 Annual Performance Report, p. 71; SBA, FY2022
Congressional Justification and FY2020 Annual Performance Report, p. 49; SBA, FY2018 Congressional Budget
Justification and FY2016 Annual Performance Report, p. 65; SBA, FY2019 Congressional Justification and FY2017
Annual Performance Report, p. 51; SBA, FY2020 Congressional Justification and FY2018 Annual Performance
Report, p. 51; and SBA, FY2022 Congressional Justification and FY2019 Annual Performance Report, p. 49, all at
https://www.sba.gov/document/report-congressional-budget-justification-annual-performance-report.
For current STEP award information, see SBA, “Directory of STEP awardees, at https://www.sba.gov/funding-
programs/grants/state-trade-expansion-program-step/directory-step-awardees.
While STEP funds are competed annually, beginning in FY2018, the performance period for each award changed from
12 to 24 months.
28 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.
29 SBA, Office of International Trade, “State Trade and Export Promotion (STEP) Program Fact Sheet,” at
https://www.sba.gov/sites/default/files/files/FACT%20SHEET%20STEP%20PROGRAM%20(1-3-2013).pdf.
The SBA is authorized to waive up to $200,000 of the matching requirement for American Samoa, Guam, the U.S.
Virgin Islands, and the Commonwealth of Northern Mariana Islands. Matching funds must be comprised of not less
than 50% cash and not more than 50% of indirect and in-kind contributions. Matching funds may not be derived from
any federal program. See 48 U.S.C. §1469a.
30 SBA, “STEP Director’s Memo—STEP 9 FY21 Funding and Frequently Asked Question’s (FAQ),” at
https://www.sba.gov/document/support-step-directors-memo-step-9-fy21-funding-faqs.
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year. In addition, the 10 states “with the highest number of small business exporters” as
determined by DOC’s latest data available may not receive more than 40% of available funds. In
FY2020, these states were California, Florida, Georgia, Illinois, Michigan, New Jersey, New
York, Ohio, Pennsylvania, and Texas.31
STEP’s objective is to assist eligible “small business concerns” with exporting.32 Specifically,
STEP is designed to increase (1) the number of small business concerns that export, (2) the dollar
value of exports, and (3) the number of small businesses exploring significant new trade
opportunities.33 STEP awards may be used for
 foreign trade mission participation;
 foreign market sales trips;
 DOC subscription services;
 website fees foreign language translations, foreign market localizations, and
search engine optimizations;
 international marketing media designs;
 trade show exhibitions;
 training workshop participation;
 reverse trade missions that bring foreign buyers to the United States to meet with
potential suppliers of U.S. manufactured goods and services; and
 other export initiatives as determined by the AA for SBA’s OIT.34
The SBA’s Office of Inspector General (OIG) audited the STEP program for overall management
and effectiveness during the program’s initial year of operations (FY2011).35 The Small Business
Jobs Act of 2010 required the SBA to report to Congress “the effect of each grant on exports” in
the state receiving the grant. The OIG emphasized that the SBA did not establish baselines to
measure changes in a state’s small business exporters or exports and that the program’s
performance goals were not specific and results-oriented.36 The 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 comments on the study,

31 SBA, Office of International Trade, “State Trade Expansion Program (STEP): Notice of Funding Opportunity no.
OIT-STEP-2020-01, FY2020,” p. 4, at https://www.sba.gov/document/information-notice--state-trade-expansion-
program-step-funding-opportunity-announcement-faq.
32 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.
33 SBA, Office of International Trade, “State Trade Expansion Program (STEP): Notice of Funding Opportunity no.
OIT-STEP-2020-01, FY2020,” p. 5, at https://www.sba.gov/document/information-notice--state-trade-expansion-
program-step-funding-opportunity-announcement-faq.
34 15 U.S.C. §649(l)(2); and SBA, Office of International Trade, “State Trade Expansion Program (STEP): Notice of
Funding Opportunity no. OIT-STEP-2020-01, FY2020,” pp. 5-7, at https://www.sba.gov/document/information-notice-
-state-trade-expansion-program-step-funding-opportunity-announcement-faq.
35 SBA’s OIG, 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 (hereinafter, SBA’s OIG, The SBA Need to Improve Its
Management of the State Trade and Export Promotion Grant Program).
36 SBA’s OIG, The SBA Need to Improve Its Management of the State Trade and Export Promotion Grant Program.
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OIG determined that SBA management was responsive to nearly all issues raised in the report as
SBA prepared its FY2012 round of STEP awards.37
Recent STEP Legislation
As mentioned, the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125) renamed
the STEP program as the “State Trade Expansion Program.” The act also reformed some of the
program’s procedures.38 For example, the act authorized the Associate Administrator (AA) for
International Trade to give priority to STEP proposals from states that have a relatively small
share of small businesses that export or would assist rural, women-owned, and socially and
economically disadvantaged small businesses and small business concerns.
During the 116th Congress, H.R. 6133, the Step Improvement Act of 2020, would have required
the SBA to conduct an annual survey to solicit feedback on the program and to collect data on
certain performance metrics such as the (1) total number of small businesses assisted by the
program, (2) total dollar amount of export sales by participating small businesses, and (3) number
of small businesses that have created new jobs through their participation in the program.
Also, P.L. 116-136, the CARES Act, among other provisions, authorized the SBA to reimburse
STEP award recipients for financial losses related to a foreign trade mission or trade show
exhibition that was cancelled solely due to a public health emergency declared due to COVID-19
if the reimbursement does not exceed the recipient’s grant funding. The act also authorized the
SBA to use amounts made available for STEP in FY2018 or FY2019 through the end of FY2021.
In addition, the House-passed version of the Build Back Better Act (H.R. 5376) would provide
$31.71 million in FY2023 and in FY2024, with each appropriation to remain available until
September 30, 2027, for additional STEP grants.39
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

37 According to p. 15 of the OIG report, SBA was not responsive to requests for documentation for how STEP awards
were made for FY2011 and FY2012. OIG concluded that documentation had not been properly maintained.
38 P.L. 114-125 also included provisions intended to improve coordination between the federal government and the
states, to authorize reverse trade missions and procurement of consultancy services, and to require the SBA Inspector
General to provide to the Congress a report on the revised STEP program within 18 months of the first grant award.
39 For additional information concerning the Build Back Better Act, see CRS In Focus IF11980, Build Back Better Act:
Small Business Administration Sections, by Robert Jay Dilger and Anthony A. Cilluffo.
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 insufficient capacity to export,
 not enough information or lack of awareness of services available,
 logistical difficulties in international distribution,
 challenges 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.40
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 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.41 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.
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, result in net social loss of economic
efficiency because finite resources are not being used to produce their maximum output for the
lowest cost.42 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.
At the same time, most economists believe that some government assistance could be justified in
the presence of a market failure, in which the market is unable to efficiently allocate resources on
its own. If there is indeed 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 the
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

40 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.
41 See Joe Peek, The Impact of Credit Availability on Small Business Exporters, SBA 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.
42 Economists typically view the most efficient means of production as the one that provides the most benefit at the
lowest cost.
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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, other experts are divided 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 individual countries have a
compelling policy interest to increase the real (inflation-adjusted) income of their citizens, often
through promoting growth in specific, tradable sectors.43 Supporters of trade competitiveness
theory are largely focused on strategies that guide individual businesses in the marketplace.44
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 greater 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,
and reduced investment by foreign businesses in the United States, among other outcomes.
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 that 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, then-
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.45
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

43 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.
44 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.
45 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.
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trade competitiveness theory based on the economic theory of comparative advantage.46 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 in which
they possess a comparative advantage instead of using government resources to provide
incentives for economic activity in an industry in which they are relatively less efficient in
production. In summary, Krugman reaffirms traditional economic theories that contend that
government policies that promote employment in certain sectors redirect 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).47
Even if other countries are providing government incentives for their national small businesses to
export, 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
unemployment by sending political signals of support for certain industries, or engage in “beggar-
thy-neighbor” policies of international retaliation that consume national resources.48
Duplication of Services
In the past, Congress has passed legislation to increase export promotion programs targeting
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.49 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 associate administrator to head
the OIT 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) has identified overlap of services between SBA’s
export promotion activities and other federal agencies. GAO has compared SBA’s programs with

46 See Paul R. Krugman, “Competitiveness: A Dangerous Obsession,” Foreign Affairs, vol. 73, no. 2 (March/April
1994).
47 Paul R. Krugman, “Proving My Point,” Foreign Affairs, vol. 73, no. 4 (July/August 1994).
48 Rudolf Scharping, “Rule-Based Competition,” Foreign Affairs, vol. 73, no. 4 (July/August 1994).
49 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.
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those at Ex-Im and various parts of DOC.50 Particularly, GAO noted that SBDCs and Commerce
provide some similar one-on-one counseling services to small businesses and that SBA and Ex-
Im offer overlapping loan guaranty 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 in which it has 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
exporting.
After interviewing 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.51 GAO recommended that SBA consult with Ex-Im and
Commerce more closely to provide specific guidance regarding the agencies’ export promotion
counseling to small business and to identify ways to share client information. SBA 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.52 GAO also
recommended that SBA and Ex-Im may be able to explore options to harmonize export financing
products and 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 has 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. In his FY2015 budget recommendation, President Obama included SBA as one
agency whose trade-related functions could be consolidated under a single agency for trade
promotion.53 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 were introduced to help small businesses exporters, including
the following:
 The Export Coordination Act of 2013 (H.R. 1909) would have helped to clarify
the role of each federal agency in each part of the export process. More
specifically, the bill would have revised the duties of the Trade Promotion
Coordinating Committee (TPCC) and expanded its membership, and it would

50 See Appendix I in GAO, 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 GAO, Small Business Administration Needs to Implement Its Expanded Role, GAO-13-217, January 2013, at
http://www.gao.gov/assets/660/651685.pdf.
51 GAO, Small Business Administration Needs to Implement Its Expanded Role, GAO-13-217, January 2013, at
http://www.gao.gov/assets/660/651685.pdf (hereinafter, GAO, Small Business Administration Needs to Implement Its
Expanded Role).
52 GAO, Small Business Administration Needs to Implement Its Expanded Role, p. 33.
53 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 R44909, Executive Branch Reorganization, by Henry B.
Hogue and CRS Report R42555, Trade Reorganization: Overview and Issues for Congress, by Shayerah I. Akhtar.
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have required the Secretary of Commerce to make available more information on
trade missions, trade fairs, and related activities.
 The TRADE (Transparent Rules Allow Direct Exporting) for Small Businesses
and Jobs Act (H.R. 1916) would have assisted small businesses in increasing
their exports and entering 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 nontariff laws, regulations, and practices and
to display this information in a clear and easy-to-read format.54
 The Small Business Export Growth Act (S. 1179) would have encouraged greater
coordination between state and federal resources by creating a working group on
the 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 have required
increased representation and integration of state trade programs into federal trade
promotion programs and established information sharing and reporting metrics
between the states and the federal government.
In the 114th Congress, P.L. 114-125 enacted provisions that were similar to versions of the bills
from the 113th Congress, above, or subsequent versions of those bills introduced in the 114th
Congress. In particular, Sections 504 and 505 of P.L. 114-125 contained provisions that are
intended to increase coordination of federal export promotion programs, reform the Export.gov
web portal to be more accessible to small business exporters, integrate state trade programs into
federal trade programs, and clarify the role of the TPCC in promoting state and federal export
promotion programs. Both the SBA’s AA for International Trade and the Secretary of Commerce
have various roles in these trade promotion reforms, and the act mandates that these agencies
produce plans for carrying out the reforms as well as a set of reporting metrics. These
deliverables to Congress could inform the debate about small business trade promotion policy in
the 117th Congress, and be possibly subject to congressional oversight hearings.

Author Information

Robert Jay Dilger
Adam G. Levin
Senior Specialist in American National Government Analyst in Economic Development Policy

Anthony A. Cilluffo

Analyst in Public Finance

54 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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Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
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