By Ken Christensen

When Susan Axelrod discovered an overseas market for her quiches 25 years ago, her private bank wasn’t there to help spur the new facet of her business.

To make more than one sale at a time, Axelrod needed to take out loans against her receivables—orders that have been received, but not paid for in full, by customers. But her lender wouldn’t recognize them. Axelrod’s foreign customers were too risky, the bank said, and she would have to find a way to insure her exports.

“As our export business grew, it became more and more important to us,” she said.

In the mid-90s Axelrod turned to the Export-Import Bank of the United States—the federal agency with a mission to finance exports of U.S. goods and services when the private sector is unwilling. The bank, widely called Ex-Im, will cover 95 percent of an invoice if a distributor in the Middle East doesn’t pay back Love and Quiches for a shipment of its layer cakes, cheese cakes, and bread and butter pudding.

Ex-Im, established in 1934, distributed $32 billion in support to U.S. exporters last year, an increase of one-third from 2010’s total. $6 billion of that went to help small companies like Love and Quiches, and 300,000 jobs were created, according to an annual report.

But the bank’s charter is set to expire May 31, and a divide in Congress is threatening its renewal. Patrons like Susan Axelrod and backers like President Obama, who hopes to double U.S. exports by 2015 through the National Export Initiative, say that legislators need to renew the bank’s funding. Otherwise, they say, American manufacturers and exporters won’t be able to compete globally, thousands of U.S. jobs will be destroyed, and the economic recovery, which has been propped up by growth in export sales, will slow.

Export Sales Supported, by State, 2007-2012

Source: The Export-Import Bank of the United States

“I think we’re really putting jobs at risk,” said Rick Gorko, an adviser to start-up export firms at a Small Business Development Center in upstate New York. “There’s great demand in some of these growing countries.”

Love and Quiches has thrived off its ability to meet growing demand abroad. Since Axelrod joined Ex-Im, overseas transactions have grown to 20 percent of her company’s total sales volume. In those 15 years, her company has doubled in overall volume and employment, she said. Axelrod now employs 200 to 250 people, depending on the season.

She could have gone to the private sector for insurance, but her policy with Ex-Im is cheaper, she said. Every time she ships $100 to one of her safe clients, she pays 20 cents. And she pays 55 cents on every $100 shipped to riskier distributors. That means between $1,500 and $2,500 go to the Ex-Im Bank every month to protect against losses.

“So there’s no premium,” she said. “We only pay on dollars shipped.”

With up to one million dollars in export sales each year, Love and Quiches has an ideal insurer in the Ex-Im Bank, said Edward Arnold, president of Trade Credit Insurance Agency.

If a company has to insure less than $2 to 3 million worth of product yearly, going through the private sector isn’t feasible, he said. Private insurance requires minimum premiums between $10,000 and $75,000, he said. The greater the export volume, the less these premiums matter.

“The true advantage, especially with small businesses, is there’s no minimum premiums for most of Ex-Im’s products,” Arnold said.

Steven Dreyfus, who operates Dreyfus Global Trade in New York City, is also reaping the benefits of lower monthly costs. He switched to Ex-Im credit insurance five years ago when his private insurer issued an unwarranted hike in his premiums, he said. His current situation is much more manageable, he said.

The result is a better cash flow. Not only is credit insurance with Ex-Im cheaper, it encourages banks to treat foreign receivables like domestic ones and lend smaller exporters capital to make more sales.

“It allows us to sleep at night and have a more calculated risk to improve our business,” Dreyfus said. “If a country goes to hell in a handbasket, we get back money to help recoup some of the losses.”

Small businesses can also offer more competitive terms of payment and feel secure. That’s especially important given the popularity of export subsidies worldwide.

“There are a lot of countries that have very active Ex-Im Bank equivalents,” Arnold said.

In an exporter’s ideal world, every sale would be paid for cash-in-advance, but overseas buyers look for a good deal like anyone else, Gorko said.

“They need assurances, too,” he said. “It’s the chicken or the egg type of situation.”

Arnon Rosan, president and CEO of the New York-based Signature Systems Group, sells mostly to concert promoters. Many of his customers aren’t well established, they stage multiple events at once and can’t pay much up front for his product. But his company need not worry, he said.

“It changes the whole risk dynamic for us, so that we know we can just do day-to-day transactions,” said Rosan, whose company specializes in portable flooring and fencing for Madonna and Metallica concerts and global events like the World Cup and the Olympics. “We’re not a high profile business. These things are available to everyone.”

Parties that oppose renewal of the bank’s charter would disagree. Conservative groups like the Cato Institute, Heritage Action for America, and Club for Growth say that the bank is a form of government intrusion into markets. They say that Ex-Im doesn’t support all businesses equally, but picks winners and losers.

“[President Obama] shouldn’t be allowed to goose the numbers by handing out market-distorting tax dollars to companies that curry the most favor or have the best lobbyists,” said the Club for Growth, in a statement.

The bank’s biggest winner is Boeing. Since 2007, customers of Boeing have received half of Ex-Im’s total financing. Delta Air Lines became the most vocal corporate opponent of Ex-Im’s renewal in 2011. The bank provided $2 billion in support to an Indonesian airline, Lion Air, to purchase Boeing’s jets. Delta says support for Boeing has hurt its own global competitiveness.

Losers can include small start-up companies too, Arnold said. The Ex-Im Bank prefers firms that are at least one year old. Most new exporters have to bide their time with no insurance at all, just like Love and Quiches did 25 years ago. Some can’t offer attractive terms of payment, while others don’t even enter the market, Gorko said.

“You have to start off with very small transactions, and even one non-payment could be devastating,” Gorko said. “The ones that I do work with, they sometimes just don’t get to that point.”