application and determined that, if the lender agrees to make the

loan, an SBA guaranty will be available.

The Export Working Capital Program (FTCP)

In the area of providing capital for exporting, the SBA has refined its 7(a) program to meet a gap in private sector lending. Many private sector lenders have little or no experience with trade loans under $1 million. Because they are not familiar with these loans, lenders believe that they are too risky and time-consuming to be commercially reasonable. Yet it is precisely these smaller loans that many small exporters need. In response to this need, the SBA worked to design a program to provide small business with the working capital necessary to support their export transactions.

In order to make this program operate most effectively, the Administration requested, and Congress approved a harmonization, or blending, of the SBA export working capital program with the This harmonization finance program of the U.S. Export-Import Bank.

was

of. the efforts

of

the result President Clinton's Trade Promotion Coordinating Committee, which addressed the difficulties American companies have working through the maze of the 19 Federal Agencies Federal Government that are involved international trade. As part of this harmonization,

of the

in

the SBA

adopted Eximbank's practice of providing preliminary commitments to exporters with

not the SBA,

the

lender, reviewing the loan

application first, in a manner similar to the pre-qualification programs that I mentioned earlier.

The SBA also worked with Eximbank to develop a simplified, user friendly, joint application form which now lets the exporter apply either to the SBA or Eximbank depending on the loan amount

requested with the larger loans going to Eximbank and the smaller loans going to the SBA. Finally, we developed joint lenders' guides and instructions; and, with the support of the Congress, obtained the legislative changes necessary to allow the SBA to guarantee 90 percent of the EWCP loan and the authority to guarantee standby letters of credit, an increasingly common feature of many international sales contracts.

IMPROVED EFFICIENCY OF OPERATIONS AND PROCESSES

Processing

The SBA has not limited its efforts to adding new programs or changing existing ones. To maximize use of taxpayer dollars, we have taken steps to improve the efficiency of our operations and our processes. Using the example of private sector lenders, the SBA established a centralized center to process all loans submitted

under the Preferred Lenders Program. The SBA accords preferred lender status to its most active and seasoned lenders based on the high quality of their performance and the success of the relationship between the SBA and the lender. A preferred lender is authorized to approve loans on behalf of the SBA without the Agency's prior credit review. This processing center is also responsible for processing loans under the FASTRAK program.

I mentioned earlier that SBA is also moving to centralize LowDoc loan processing in two locations.

servicing a Growing Loan Portfolio

The SBA loan portfolio consists of three types of loans guaranteed loans made under SBA's 7(a) and Certified Development Company loan programs, disaster business loans, and disaster home loans.

Several years ago, the SBA determined that it could service the disaster home loans in its portfolio on a more cost effective basis if it centralized these servicing activities in four centers. The centers are highly automated and provide greater efficiency because they allow economies of scale.

The efficient operation of these centers inspired the SBA to establish similar servicing center operations to handle our disaster and regular business loan portfolio.

-

SBA has established

one in Fresno, California,

SBA

two Commercial Loan Servicing Centers and one in Little Rock, Arkansas. When fully operational, these centers will, with limited exceptions, service the entire commercial loan portfolio of loans that are current through 60 days past due. By centralizing its loan servicing functions, SBA will be able to take advantage of economies of scale and the latest in

automation, thus reducing operation costs and allowing the Agency to manage its growing portfolio and improve the quality of the service being provided to the small business community and to participating lenders.

By improving our products and processes, SBA has greatly improved loan processing times. Currently SBA's average processing times for its various programs are:

Export Working Capital Program (EWCP)

3-10 days

10-15 days

Certified Development Company Loan Program

The bottom line at SBA is that we are working to improve the quality and variety of our loan programs while also has reducing the time, paperwork and expenses involved in participating in our

programs.

OFFICE OF ADVOCACY FINANCIAL INITIATIVES

The Office of Advocacy was established by Congress twenty years ago to be an independent voice of small business interests before Federal agencies, the Administration and Congress. It is

headed by a Chief Counsel appointed by the President and confirmed by the Senate. The Chief Counsel has the authority to take positions independently of the Administration on small business concerns.

The Office of Advocacy has initiated two projects which address the issue of small business access to capital and credit. The first project is an annually issued analysis of bank loans made by commercial banks to small businesses. Using data culled from the June "call reports" that are required by Federal bank