February 5, 2020
By Caity Witucki
Contributing Editor, C-Suite Tips Wednesday
C-Suite Tips – Lending Institutions are Taking Advantage of the New USMCA
On January 29th, President Donald Trump signed the United States-Mexico-Canada Agreement (USMCA) and lending institutions are already seeing the benefits. Although Canadian Prime Minister, Justin Trudeau has yet to sign the agreement, lending institutions that specialize in SBA and USDA loans have already reported an influx in loan applications for small businesses that hope to directly trade with Mexico and Canada as well as those that hope to capitalize on the new roadways that have been planned to support the growing amount of North American trade.
The International Trade Commission says the USMCA could add up to $2.2 billion in new economic growth within five years and create 589,000 jobs. Two out of three of those new jobs will come from small businesses as they gain access to two-thirds of the world’s foreign purchasing power.
Shortly after President Donald Trump signed the agreement, SBA Administrator Jovita Carranza issued a statement. “Today’s signing into law of the USMCA by President Trump is a landmark achievement that promises to create lucrative new opportunities for small businesses, including many minority-owned businesses,” says Carranza. “ This new framework will make it easier to sell products to consumers in Canada and Mexico by eliminating complex and cost-prohibitive rules requiring small businesses to open foreign offices.”
Lending institutions have reported the largest influx of SBA and USDA activity related to the USMCA in Iowa, Missouri, Nebraska, and Kansas where Canada and Mexico are the top export markets. Small businesses in these areas will not only benefit from ongoing trade but also the Small Business Trade Committee that the USMCA establishes.
The SBA expects loan activity to spike as more small businesses take advantage of the new trade opportunities. Therefore, SBA and USDA lending institutions should prepare to do more loans for small businesses in the automobile sector, in the agricultural sector, and the energy sector, all of which are heavily impacted by the USMCA.