WASHINGTON — Hundreds of millions of dollars in financing that helps N.C. companies export products overseas could be at risk after Senate Republicans blocked an attempt by Democrats to reauthorize financing for the U.S. Export-Import Bank.
The bank is an independent federal agency that dates back to the 1930s and provides bridge loans and credit guarantees to finance the overseas sale of American products.
Last year, the Export-Import Bank guaranteed or offered insurance on loans worth more than $380 million that supported more than $1 billion in N.C. exports.
Frontier Spinning Mills is one N.C. company that has benefited from the financing.
The Sanford yarn manufacturer received a $40 million loan guarantee in November that will allow the company to hire 50 new employees and increase foreign sales. Frontier Spinning Mills, which has $750 million in sales and employs about 1,100 people, provides cotton for clothing companies such as Hanes.
CEO John Bakane said the Export-Import Bank has been key to the company’s export growth to Central America, Mexico and China.
“Bottom line over the last three years we’ve doubled our sales and increased employment by about 50 percent, or 400 jobs, and invested almost $40 million in plant and equipment,” said Bakane, during a conference call set up by U.S. Sen. Kay Hagan.
Democrats proposed adding the bank reauthorization to a small-business investment bill, known as the JOBS Act, which has bipartisan support. But Sen. Mitch McConnell, R-Ky., the minority leader, urged his Republican members to vote against taking the Export-Import measure up as part of the JOBS bill.
On Wednesday, senators voted to continue debate on the small-business bill and McConnell said Republicans would be willing to take up the reauthorization of the Export-Import Bank in separate legislation. The vote today sets up a final vote possibly next week on the JOBS bill.
While the Export-Import measure does have support from some business-friendly Republicans, others are against it because they oppose federal subsidies for free enterprise.
The bill also has the backing of the U.S. Chamber of Commerce and the National Association of Manufacturers.
The bank’s authorization expires at the end of May, but Hagan, a Greensboro Democrat is among a group of Senate Democrats who warns that the bank will hit its $100 billion financing limit in a matter of weeks.
“As our economy is finally showing some hopeful signs of recovery, now is not the time to let partisanship tie the hands of our small-business owners,” Hagan said.
Export-Import Bank financing last year supported $41 billion in U.S. exports from more than 3,600 U.S. companies.
Some conservative groups, such as the Club for Growth, have sought to eliminate the bank saying it results in unfair competition. Delta Air Lines has criticized the bank for providing loan guarantees that allow foreign airlines to save money on new U.S.-made planes.
The Associated Press contributed.