It’s a performing asset for business growth.
Have you noticed all the talk this summer about the Export-Import Bank? Some of the most powerful organizations in America—from Congress to the U.S. Chamber of Commerce—have been arguing over whether the Ex-Im Bank should continue to exist.
Unfortunately, many of the people involved in the debate are unfamiliar with the program and don’t understand how it helps U.S. companies, especially small and medium-size enterprises, compete internationally.
My company, Bio-Microbics, has used Ex-Im Bank’s services, and despite what you might have heard, it is not corporate welfare. Rather, it’s an insurance program for the U.S. commercial banking industry, allowing exporters to obtain reasonable loans in the same way that Fannie Mae and Freddie Mac assist individual homeowners.
Ex-Im provides four levels of export assistance to American companies through the banking industry. They are:
» Low-cost, market-based loans to foreign buyers so they can purchase U.S.-made equipment and services.
» Insurance for U.S. exporters’ receivables to ensure they get paid.
» Short-term loans for small and medium-size companies so they can purchase inventory and service large purchase orders from overseas clients.
» Lines of credit to small and medium-size companies so they can purchase raw materials for export sales.
Ex-Im actually earns money for the U.S. Treasury. Last year, Ex-Im returned more than $1 billion to Treasury. That’s because these are not charitable or risky loans. The borrowers are vetted as tightly as—or, in some cases, more strictly than—normal circumstances through regular banks.
For example, let’s say a foreign buyer wants to purchase equipment from our company to treat their wastewater. The buyer has good credit consisting of two to three years of audited financials and at least three good trade references with U.S. suppliers. In the customer’s country, the interest rate fluctuates from 14 to 17 percent, and the banks there will place short- and medium-term loans at the higher end of the range. This makes the buyer’s project nearly untenable.
But through Ex-Im, the customer might be eligible to obtain a loan at reasonable U.S. market rates, which are roughly one-third of what’s available in his or her own country.
Why is this important? Many of Bio-Microbics’ competitors are based in countries that provide similar programs. Without America’s Ex-Im, our customers could easily buy this equipment from a foreign company.
Not having an Ex-Im program would undoubtedly damage our economy. Because Ex-Im is a performing asset that assists most American businesses, grows our economy and creates jobs, there should be only one outcome—the proper reauthorization and implementation by Congress of the Export-Import Bank.
