Gear Up For Globalization: Answers From Real People (#3)

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Question from:

Laurel Delaney, Founder and President, GlobeTrade:

"Do you think Ex-Im Bank will cut back or be more willing to extend loans to SMEs (that qualify on exports) this year in light of a possible recession?"

Answer from:

Tess Morrison, Director, Illinois International Trade Center, University of Illinois, College of Business, Champaign, Illinois.

"Exim (and SBA) will not cut back for SMEs, whether or not there is a recession. Exim is committed to serving at least 20% of their business as SMEs.

All companies need to adhere to the financial guidelines, but they have as much to do with the buyers as the sellers. Exim must (by law) act as a bank. For example, they can only do business where there is a reasonable expectation of repayment. The onus is on the buyer. Otherwise, we, the U.S. taxpayer has to pick up the slack. Exim looks at the seller to make certain that they do not appear about to go under (to give an excuse to not repay by the buyer.) Exim is committed to SMEs."

Delaney (clarification):

"So Exim will not be in the same league as all the other banks on being super cautious with loans to SMEs due to the mortgage meltdown?"

Morrison:

"That's correct. They don't do the same kind of lending as regular banks. Their focus is on the buyer being able to repay so that we the U.S. taxpayer isn't stuck with the repayment."

Note: I am still waiting to hear back from two other experts (one from Chicago and one from headquarter office) at Exim Bank on the same question.

Gear Up For Globalization: Answers From Real People (#2)

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Question from:

Laurel Delaney, Founder and President, GlobeTrade:

"Do you think Ex-Im Bank will cut back or be more willing to extend loans to SMEs (that qualify on exports) this year in light of a possible recession?"

Answer from:

Harvey Bronstein, Senior International Economist, U.S. Small Business Administration, Washington

"As far as ExIm Bank, you'll have to talk with them.

As far as recession, the US is not in a recession, which is commonly defined as two quarters, that is a period of six months, over which the size of the US economy actually shrinks. For the third quarter of 2007, that is through Sept. 30, the economy actually grew almost 5%, far above the long-term average growth rate of the economy. Although growth will almost certainly be slower in the fourth quarter of 2007 than it was for the earlier part of the year, one quarter of slow growth does not equal "recession."

Concerning job creation, small businesses often create well over one-half of all net new jobs in the economy. Please refer to the link below on our website:

6. How many new jobs do small firms create?

Over the past decade, small businesses created 60 to 80 percent of the net new jobs. In the most recent year with data (2004), small firms accounted for all of the net new jobs. Firms with fewer than 500 employees had a net gain of 1.86 million new jobs. Large firms with 500 or more employees lost more jobs than they created, for a net loss of 181,122 jobs. For information on employment dynamics by firm size from 1989 to 2004, see www.sba.gov/advo/research/data.html#us.

On small business and exporting, 2007 will be a record year with small businesses racking up over $400 billion in exports. While in the third quarter of 2007 the economy grew 5%, exports grew by 19%. So long as the dollar remains weak and other countries' economies strong, the outlook for exports is bright."

Note from LD: Interesting "definition" of Export-Import (Exim) Bank at Answers.com.

Gear Up For Globalization: Answers From Real People

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Question from:

Laurel Delaney, Founder and President, GlobeTrade:

"Do you think Ex-Im Bank will cut back or be more willing to extend loans to SMEs (that qualify on exports) this year in light of a possible recession?"

Answer from:

Chad Moutray, Chief Economist & Director of Economic Research, U.S. Small Business Administration, Office of Advocacy:

"Small businesses are increasingly sophisticated global players who are able to spot opportunities, whether these are found in their local communities or across the globe. The depreciated dollar has given entrepreneurs -- many of whom had not looked at the export market before -- a golden opportunity to pursue sales abroad."

Regarding the possibility of a downturn, Moutray referred us to this study (be prepared for an immediate PDF file download) by Craig and Kohlhase that had been released in December 2006. Note the research summary's overall finding: "Small firms play a vital role in maintaining economic growth in urban areas."

Moutray does not follow the movings of the Ex-Im Bank so there was no comment on the loan policy.

Sign up for Advocacy's ListServ here.

Add on from LD (1/26/08): Interesting "definition" of Export-Import (Exim) Bank at Answers.com.

Gear Up For Globalization

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We are gearing up to rally the global small business troups to export like mad in 2008 -- a year when the U.S. dollar is so low that it makes exports of all American goods a flashing blue light special.

In getting started, we have been working behind the scenes to create a new global platform for small businesses that will help them connect, collaborate and do more business internationally but you must first sign up for Borderbuster to learn about the launch on February 5th. Yes, word will get out fast, but why wait? Go here.

Next, we decided to reach out by email to the best of the best of global business experts and ask their opinion relative to the following question:

Do you think Ex-Im Bank will cut back or be more willing to extend loans to SMEs (that qualify on exports) this year in light of a possible recession?

My belief is that entrepreneurs and small businesses are typically the ones who create jobs in a downturn (refer to WSJ commentaries here and here) and that they most certainly lead the way on exports.

Let's see what some of our experts weigh in with starting tomorrow. You won't want to miss this.

And saving the best for last, on Tuesday, January 29th, we will be interviewing GEM Research Director I. Elaine Allen, PhD, on the latest key findings from the GEM 2007 Executive Report.

Be sure to stay tuned on all these great channels of global small business information.