HD72 - Report of the Department of Economic Development to Examine the Feasibility of Developing Import-Export Banking Within the Commonwealth


Executive Summary:
The information collected during the process of the study, which included direct responses from selected Virginia exporters and existing providers of export financing assistance, conclusively supports the need for state involvement to provide financial assistance in the area of finance and to facilitate access to capital for international trade activity. It was clear that the basic infrastructure provided by Virginia banks and existing public sector programs (federal and state) is well-conceived but limited in outreach and flexibility. The supporting survey data indicates that the availability of financing has a significant impact on the competitiveness of Virginia exporters but that knowledge levels are relatively low regarding available options. In the review of existing public and private-sector programs in Virginia, it was evident that these programs have significant value; however, their resources are insufficient to reach and serve a significant sector of the potential market. The analysis of financing programs in California and Maryland clearly reflects the investment required to deliver a successful program and adequately meet the needs of the international business community. As a result, the following two conclusions are offered:

1) Virginia should consider maximizing its existing export financing infrastructure by devoting additional resources to the program currently established within the Virginia Small Business Financing Authority. The availability of staff to work in partnership with the Virginia banking community and provide one-to-one assistance to Virginia exporters throughout the financing transaction could maximize the value of existing public and private sector resources.

2) Consideration should be given to the establishment of a state funded Export Guaranty Program to reduce reliance on federally funded credit enhancement available through the U. S. Small Business Administration and the U. S. Export-Import Bank. In Maryland and California, a substantially greater number of businesses have been served through a more flexible and accessible state funded and administered program.

The report provides complete details regarding survey responses, experience and operating data from export financing programs in Maryland and California, an analysis of Virginia's current Export Financing Assistance Program, and a review of international banking services offered by four major regional Virginia banks. In summary, Virginia has the infrastructure in place to deliver comprehensive export financing assistance to Virginia businesses. With implementation of the enhancements recommended above, Virginia can better increase the competitiveness of its businesses in the international marketplace.