Friday, February 01, 2008

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.

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