Can a Louisiana engraving equipment firm illustrate the path to win the future? Yes.
Xenetech Global Inc. revolutionized the computerized engraving industry last year with the Duo Desktop, which combines two technologies into one machine. An Export Express loan through Hancock Bank and guaranteed by the Small Business Administration helped Xenetech take the Duo global. Currently, it exports the Duo to more than eight countries and employs more than 15 people directly along with 15 full-time contractors. Exporting helps Xenetech create jobs and achieve economic prosperity.
Doubling American exports by 2015, a goal reiterated by President Barack Obama in this year’s State of the Union, is critical to American competitiveness. Small firms such as Xenetech are critical to achieving this goal. After all, there is nothing small about these firms’ effect on our nation. These enterprises create two out of every three new American jobs and employ half of all working Americans. Since 2003, exports from America’s small businesses have grown about 80 percent and now account for nearly $500 billion in annual sales. Thanks to the Internet, any business owner with a Web connection can sell products and services worldwide. Nevertheless, more than half of small-business exporters ship to only one country and only represent about 30 percent of export revenues.
Through the SBA, Congress can increase both the number of small-business exporters and the number of markets to which they ship. We can do this by protecting the SBA’s budget from a proposed $85 million Republican ax. Curbing SBA funding runs counter to promoting American growth and could negatively affect SBA export programs.
The president and Congressional Democrats recognize the importance of small-business incentives and assistance. Augmented funding in the economic stimulus package — which a Democratic majority drove to enactment two years ago — increased the SBA budget and, in effect, raised American support for small business to its highest level in a decade. The Democratic-backed Small Business Jobs Act, passed last year, continued that trend. It allowed the SBA to increase the top amounts of its biggest lending programs, including the Export Working Capital Program loans and the International Trade Loan Program. These funds ensure firms have the necessary capital to buy equipment and hire new workers, especially during the critical time of bringing on a new buyer or hedging an opportunity in a new market.
The jobs act empowered the SBA to convert its pilot loan program Export Express, which Xenetech used, into a permanent program. Export Express gives trusted lenders the ability to use streamlined applications and quick turnaround on loans of as much as $500,000. Additionally, the loan guarantee is now up to 90 percent — the highest amount ever — which allows smaller community banks to participate in the program. We have and must continue to improve small firms’ capacity to export through SBA programs.
The law also helped the SBA achieve pre-recession lending levels by increasing the loan guarantee and temporarily subsidizing fees, which is great news for businesses.
Unfortunately, minority-owned firms are still paying higher interest rates on loans, they are more frequently denied credit, and they have less than half the average amount of recent equity investments and loans than non-minority firms. This disparity exists even though minority-owned firms are competitive in terms of growth in number of businesses, total gross receipts, number of employees and total annual payroll. Additionally, these firms frequently hire Americans who are disproportionately unemployed. The jobs act’s Small Business Lending Fund and Small Business Credit Initiative granted capital to community financial institutions and states to increase lending to these and all small businesses. These lending tools must now be evaluated for effectiveness.
Additionally, Congress must ensure that underrepresented small businesses receive their fair share of federal contracts by holding the SBA accountable for the results of its minority business development programs. Programs that encourage participation of underrepresented businesses, such as the women’s procurement program that mandates at least 5 percent of U.S. procurement dollars go toward women-owned small businesses, must be preserved and regularly reviewed. The 8(a) Business Development Program is another important and effective tool in leveling the procurement playing field for disadvantaged businesses and providing mentorship for owners.
Both Congressional Democrats and Republicans frequently talk about increasing American entrepreneurship, innovation and exports. Democrats back up our talk with action. I challenge Republicans to do the same. Together, we must act in a bold and bipartisan fashion to support our small businesses, help put Americans back to work and increase American competitiveness.
Rep. Cedric Richmond is one of two freshman Democrats on the House Small Business Committee. He was elected with 65 percent against Republican incumbent Anh “Joseph” Cao in Louisiana’s 2nd district (New Orleans).
Visitors get their first look at the American Veterans Disabled for Life Memorial, which opened to the public on Monday, Oct. 6, 2014. The new memorial is located off Independence Ave. SW between the Rayburn House Office Building and HHS. Buy photo here.