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Small Business Becomes Pawn In Fight Over Ex-Im’s Fate

The Export-Import Bank is attempting to rebrand itself as a key ally of small businesses, but overcoming its reputation as “Boeing’s Bank” could be an uphill battle.

Ex-Im has been under sustained attack since last summer, when a number of prominent Republicans, including Reps. Paul Ryan and Jeb Hensarling, attempted to prevent Congress from extending its charter.

Although the effort was not entirely successful, the bank’s opponents did manage to force a compromise limiting the extension to six months, setting up another reauthorization fight in June. (RELATED: Is the Export-Import Bank Done?)

“Under threat of extinction from Congress,” the Washington Post reports, “the agency is working to reshape its image and brand itself an important tool for small businesses,” most recently with an event at which Ex-Im Chairman Fred Hochberg extolled the bank’s benefits before dozens of local business executives.

“Our bottom line is American jobs, but we also know that the bottom line for your small businesses is sales,” Hochberg told the executives. “Our products, our experts, our entire agency, it’s all here to break down the barriers that hold you back from winning global sales.”

Ex-Im assists American exporters by providing financing and loan guarantees, often for transactions that private lenders are not willing to finance, and while more than 80 percent of the agency’s funds are spent backing purchases from large corporations like Boeing, GE and Caterpillar, its defenders are quick to point out that nearly 90 percent of its transactions benefit small businesses.

Such arguments are particularly important to the bank’s long term survival, the Post claims, because “It will likely be much easier to drum up support for saving an agency that’s perceived as backing the little guys, not one that relies on taxpayers’ money to grease the exporting wheels for multinational corporations.”

Critics, however, believe Ex-Im will be hard-pressed to make such a perception stick. (RELATED: Lobbying Powerhouses Duke it Out Over Ex-Im Reauthorization)

Veronique de Rugy, a senior research fellow at the Mercatus Center, told The Daily Caller News Foundation that the bank supports “less than 1 percent of all small businesses in America,” so “no matter how you cut it, the small business angle is just not there.”

“Looking at the number of transactions rather than the amount of money is ludicrous,” she said, arguing that supporters are essentially asking Congress “to tolerate a program where the money benefits a small number of gigantic companies, in the name of giving a tiny portion—the crumbs, really—to small businesses.”

At the height of last summer’s contest over the bank, de Rugy published research showing that in 2007 (the most recent year for which data were available), Ex-Im’s small business deals only affected 0.29 percent of U.S. small business jobs and 0.4 percent of small business exports.

Kate Bernard of the Exporters for Ex-Im Coalition contested the relevance of those figures, telling TheDCNF that, “Most mom-and-pop small businesses don’t export, but for those that do, Ex-Im is there when the private sector isn’t—particularly when exporting to emerging markets.”

The Coalition notes that Ex-Im evaluates requests for financing on a first-come-first-served basis, and so is not really an example of favoritism so much as a tool the government makes available to businesses that need it, similar to the way governments build and maintain infrastructure.

“If a misguided minority in Congress is allowed the force the closure of the Bank,” Bernard said ominously. “Members will be directly responsible for lost jobs.” (RELATED: Exporters Worried Export-Import Bank’s Days Are Numbered)

“I have no doubt that the companies who get Ex-Im financing think that it’s awesome,” de Rugy allowed, but “even if it’s important for the beneficiary, it doesn’t mean they should do it; it’s still not a legitimate goal, especially since they basically favor a very small number of small business exporters.”

“If the point is really to help small businesses,” she suggested. “Let’s see 80 percent of the money going to small businesses. The moment that happens, the Bank goes under because the Chamber of Commerce loses interest and big companies stop lobbying Congress.”

Follow Peter Fricke on Twitter

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