U.S. Small Business Agency Seeks Entrepreneurs
to Invest in Africa

SBA's Paul Kirwin speaks at AFCOM conference

Washington - The Small Business Administration (SBA), a federal agency best known for providing working capital to entrepreneurs doing business in America, wants to increase the number of small firms interested in exporting to emerging markets in Africa, says SBA official Paul Kirwin.

Kirwin, SBA's international trade finance manager, told a panel discussion meeting at the 10th annual African Telecommunications and Information Technology Conference (AFCOM) July 18-20 that there are 25 million small businesses in the United States, two-thirds of which employ fewer than 20 people. But he lamented that only a small percentage of these businesses engage in overseas trade.

In 1998, he said, only about 200,000 small businesses, or less than 1 percent of the total number of such U.S. firms, exported goods and services. But the "good news," he said, is that that figure was an increase over the 60,000 firms that exported in 1992. At the same time, the value of small business exports over the period 1992 to 1997 increased by 300 percent.

"The trends are there," Kirwin told his audience, which included representatives of a number of telecommunications firms interested in investment opportunities in Africa. "One of our goals ... is to increase the number of small businesses that have the potential to get into exporting. It's a big goal, [but] we have about 3,000 employees in offices in every [U.S.] state who provide business advice and loans to potential exporters."

To further that goal, Kirwin said, SBA has three specific international programs: "export express," the Export Working Capital Program (EWCP) -- done in conjunction with the Export-Import Bank -- and the "fixed asset financing program," called the International Trade (IT) loan program.

Export Express, he explained, is a pilot program "for that small exporting firm that has difficulty in obtaining export financing. Loans may be used for most business purposes, including expansion, equipment purchases, working capital, inventory, or real estate acquisitions." For example, he said, "we'll lend maybe $50,000 or $100,000 to a small company to go on a trade show, go on a trade mission overseas, or translate a brochure into French or Spanish."

Kirwin said that in order to qualify for the maximum Export Express loan of $150,000, a firm must demonstrate that the loan will enable it to enter a new export market or expand an existing market and that it has been in operation, though not necessarily in exporting, for at least 12 months.

For small firms needing working capital to finance export operations, SBA's EWCP program offers "financing when that financing is not otherwise available on reasonable terms," Kirwin said. The program "encourages lenders to offer export working capital loans by guaranteeing repayment of up to $1 million or 90 percent of a loan amount, whichever is less. A loan can support a single transaction or multiple sales on a revolving basis."

According to an SBA brochure, EWCP loans can also back "standby letters of credit used as bid bonds, performance bonds, or payment guarantees to foreign buyers. EWCP loans may not be used to establish operations overseas, acquire fixed assets, or pay existing debt."

Kirwin said SBA financed one deal with a firm in Texas "that a couple of years back used an EWCP loan to export global satellite technology to Ghana, Central African Republic, and South Africa."

The last program he mentioned, the International Trade (IT) initiative, according to an SBA brochure, was designed "to assist small business exporters that require both working capital and fixed-asset financing. The SBA can guarantee as much as $1.25 million in combined working capital and facilities-and-equipment loans."

More information about SBA programs is available at the 19 Export Assistance Centers scattered across the United States, Kirwin pointed out, where "the U.S. Commerce Department, the U.S. Export-Import Bank, and in some cases the U.S. Agency for International Development [USAID] are also located. Typically, it takes about 10 business days or less to get SBA loan approvals, " he added.