According to the Trade Promotion Coordinating Committee (TPCC), one of the greatest obstacles to increased U.S. exports faced by SMEs is the lack of sufficient working capital. Working capital is used to finance the manufacture or purchase of goods and services. Eximbank and SBA have programs designed to increase the availability of export working capital to SMEs from the private sector by encouraging greater lender participation in export financing. These programs provide loan repayment guarantees that reduce the risk associated with such loans. Some states also have programs to assist SMEs in obtaining working capital. Eximbank facilitates export financing through its Working Capital Guarantee Program, which is authorized by the Export Trading Company Act of 1982 (P.L. 97-290, Sec. 206, Oct. 8, 1982). During fiscal year 1995, Eximbank guaranteed almost $302 million in export working capital loans, which represented about 3 percent of Eximbank’s total dollar authorizations for the year. Over 97 percent of the exporters assisted by Eximbank through the program during fiscal year 1995 were self-certified as small businesses, as defined by SBA regulations (13 C.F.R. Part 121). SBA developed its Export Working Capital Program (formerly known as the Export Revolving Line of Credit) in response to a requirement in the Small Business Export Expansion Act of 1980 (P.L. 96-481, Sec. 112, Oct. 21, 1980). SBA’s program falls within the statutory authority of the agency’s regular business loan guarantee program, known as the 7(a) program.Under the 7(a) program, SBA guarantees private lender loans to small businesses that have been unable to obtain financing. During fiscal year 1995, SBA guaranteed about $69 million in export working capital loans, which represented less than 1 percent of SBA’s total 7(a) program. All exporters assisted through SBA must qualify under the agency’s definition of a small business. During fiscal year 1995, over 90 percent of the businesses assisted through SBA’s working capital program had less than 50 employees. In its 1993 report to Congress, TPCC made a series of recommendations to increase the effectiveness of U.S. export financing programs. One recommendation called for the establishment of one-stop shops, that is, the U.S. Export Assistance Centers (USEAC), as a single point of contact for all federal export promotion and finance programs. Another recommendation called for federal agencies to encourage qualified state or local export finance entities to enter into cofinancing arrangements in which risk is shared. A third recommendation called for streamlining and harmonizing key features of Eximbank and SBA’s working capital guarantee programs to make them more customer-focused and take advantage of the agencies’ comparative strengths. According to TPCC, harmonization was to give SMEs access to working capital through a broader nationwide network of lenders on a more consistent, efficient, and effective basis. Key features to be harmonized included developing uniform applications, accompanying documentation, and underwriting standards. Harmonization was also to include a market segmentation plan. Eximbank and SBA emphasize different delivery approaches for facilitating their programs. Eximbank relies on its U.S. Division and network of delegated authority lenders, whereas SBA relies primarily on staff with lending authority it has assigned to the USEACs and on its network of district offices. Eight states also have export finance programs that provide working capital guarantees. Levels of financing and contractual arrangements for these guarantees vary considerably among the states. Eximbank’s U.S. Division, staffed with six loan officers and one vice president, has primary responsibility for administering the Working Capital Guarantee Program as well as some marketing responsibility. This division processed all the agency’s export working capital guarantees until the beginning of fiscal year 1995. Over the past couple of years, the division has expanded its outreach to SMEs through its Delegated Authority Program. Under this program, a private lender and Eximbank enter into an agreement that allows the lender to approve Eximbank guaranteed loans to exporters without first having to submit individual applications to Eximbank for approval. During fiscal year 1996, delegated authority lenders approved 192 loans, 69 percent of the agency’s export working capital guarantee transactions. These transactions represented 55 percent of the $413 million in loans guaranteed under Eximbank’s program. (See app. I for a map showing the locations of Eximbank’s U.S. Division and delegated authority lenders.) Although the U.S. Division and delegated authority lenders are central to Eximbank’s Working Capital Guarantee Program, the agency has other resources and arrangements for marketing and supporting the program. These include the following: Eximbank’s Business Development Division promotes and markets the agency’s small business programs, including the Working Capital Guarantee Program. This group includes Washington-based staff and five regional offices, four of which are collocated within USEACs. According to the Eximbank official responsible for regional office operations, the agency’s limited regional staff of 21 employees is expected to focus primarily on increasing the participation of banks, brokers, and other intermediaries in these programs. Eximbank has established partnerships with state and local government offices and private sector organizations under its City/State Program. These partners are to act as liaisons with their export communities, market Eximbank programs, and submit applications on behalf of small businesses. During fiscal year 1995, however, only 8 of Eximbank’s 31 partners reported working capital activity under the program. Effective in April 1996, Eximbank initiated a pilot program to strengthen its program by paying its local partners a packaging fee for applications submitted directly to the agency and a finder’s fee for referrals to delegated authority lenders that result in working capital loans. In September 1996, Eximbank initiated another pilot program to delegate authority for approving guarantees to six state partners. Eximbank has an agreement with the Private Export Funding Corporation, a private consortium of commercial banks and other users of Eximbank, in which the company (1) acts as the lender of last resort for exporters that obtain a preliminary working capital commitment from Eximbank but are unable to obtain financing from commercial sources and (2) purchases Working Capital Guarantee Program loans made by small and regional banks that require help in supporting small business exporters. Under the Working Capital Guarantee Program, Eximbank guaranteed 179 loans valued at almost $302 million during fiscal year 1995. As of June 1996, the default rate for exporters whose loans were guaranteed during fiscal year 1995 was 2.2 percent (4 defaults out of 179). The agency estimated that the cost associated with administering the program during fiscal year 1995 was about $912,000. This estimate included the costs for compensation, benefits, and overhead attributable to the U.S. Division. Although SBA’s Office of International Trade is responsible for overseeing its Export Working Capital Program, the agency relies primarily on USEACs and their district office network to implement the program. SBA has staffed the 15 USEACs with 20 international trade and finance specialists. These specialists help SBA’s 69 district offices reach their Export Working Capital Program goals by marketing and promoting the program and working directly with the exporting and lender communities to structure loans and package applications for loan guarantees. Applications are sent to 1 of 25 district offices designated as export working capital processing centers, where they are reviewed and approved or rejected. An SBA official estimated that the specialists’ spend about 85 percent of their time on the program and the remaining 15 percent on other trade-related activities. (See app. I for a map showing the locations of the USEACs and SBA district offices.) Even though SBA works primarily through USEACs and district offices, it has other resources and arrangements that help market and support the program. These include the following: SBA has coguarantee agreements with California, Kansas, and Florida. Under these agreements, SBA and the states guarantee a portion of the export working capital loan and share, on a proportional basis, any resulting losses and recoveries. California has been by far the most active state, with 25 export working capital loans valued at $8.8 million. SBA has agreements with at least 26 local private sector entities to encourage them to act as packaging intermediaries for its Export Working Capital Program. SBA uses staff from its small business development centers, about 30 of which have established separate international trade centers, to help market its financial products, including export working capital guarantees. SBA’s Preferred Lender Program, which is part of its Export Working Capital Program, is similar to Eximbank’s Delegated Authority Program. However, according to an SBA official, only 1 of about 12 preferred lenders had provided export financing under the program, as of August 1996. Under the Export Working Capital Program, SBA guaranteed 190 loans valued at about $69 million during fiscal year 1995. As of August 1996, the default rate for exporters whose loans were guaranteed during fiscal year 1995 was 1.6 percent (3 defaults out of 190). The agency estimated that costs associated with administering its program during fiscal year 1995 totaled $461,667. This estimate includes an allocated portion of SBA’s costs related to staffing and supporting USEACs. We surveyed 24 states and 1 U.S. territory initially identified as having export finance programs and found 8 states that provide export working capital guarantees for SMEs. The eight state programs were designed specifically to service small businesses. As shown in table 1, these state programs varied greatly in their level of staff resources, available funding for guarantees, and program activity. In addition, our survey identified programs in nine states and the one U.S. territory that provided export finance assistance to small companies but did not offer export-related working capital guarantees.