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Statement of the Hon. Nydia M. Velazquez on SBA Management Review: Office of International Trade

For small businesses, exporting products abroad can jump-start growth and unlock an enterprise’s full potential. Nearly 96 percent of consumers live outside of the United States. When small firms sell their products internationally, they can reach countless new customers, become more resilient, and boost their bottom line.

The approximately 166,000 small businesses in the U.S. that export account for roughly $341 billion in sales. However, small export businesses represent only 3 percent of U.S. small employer firms. That’s because exporting presents a range of unique risks and challenges for small businesses stemming from the complex nature of global trade.

Small businesses looking to expand overseas often have difficulty obtaining the capital to fill foreign purchase orders, struggle to connect with foreign buyers, and lack the expertise to understand international rules and regulations.

Recognizing these challenges, the Small Business Administration created the Office of International Trade (OIT) in 2010 to work with other federal agencies to encourage small business exports and provide export assistance to small firms.

While OIT engages in a variety of activities to promote exports including managing three different loans specifically targeted to small businesses looking to export, the Export Express, Export Working Capital, and International Trade loan programs, the office’s primary responsibility is administering the State Trade Expansion Program, otherwise known as STEP.

STEP educates small firms on the nuances of the exporting process and provides technical assistance to support small businesses as they expand into international markets.

The program awards funds to all states and territories for participation in trade missions, international marketing efforts, workshops, export trade show exhibits, and other promotional activities. These funds must be matched by the states at either 35 percent of the federal award for states with high export volumes or 25 percent for states without high export volumes.

Since its inception, STEP has helped thousands of small businesses break into the international marketplace.
In FY 2021, SBA supported $832 million in export sales from STEP and assisted over 3,400 small businesses. By expanding the number of small firms that export, we can grow both the small business and U.S. economy.

That is why we must act to strengthen and improve the STEP program. Representative Evans, along with Representative Kim recently introduced the “STEP Improvement Act of 2022” which would reauthorize the program for four fiscal years. The bill also includes measures to streamline STEP’s application process, increase grant spending flexibility, improve communication between the SBA and participating states, implement more robust reporting requirements, and allow small firms to participate in the program sooner in their business journey.

Last Congress, the House passed a similar bill, but ultimately the Senate declined to take action. I hope that we can continue our bipartisan work to pass this bill through the House this Congress and work with our Senate counterparts to enact this bill into law.

Today, I want to take a closer look at the operations of SBA’s Office of International Trade and particularly STEP. I look forward to discussing the actions Congress can take to improve the program and address any challenges facing the Office.

I want to thank Associate Administrator Esparza for being here today, and I look forward to hearing your testimony.
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