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April 26, 2012
Patton Electronics vs. Congress: Asking for Reauthorization
By Susan J. Campbell, TMCnet Contributing Editor
Speaking before the Senate Banking, Housing and Urban Affairs Committee, Robert Patton (News - Alert) told the crowd that when Patton Electronics Company first began their business, Robert and brothers Bruce and Burt used their father as their main source of capital. Unfortunately, when they were ready to take their business to the global level, their funds were cut short.
The good news was the Export-Import Bank was willing to help, according to this Free Enterprise report. The small provider of VoIP routers supporting 100 employees was ready for the next step, but they were unable to take international orders. In fact, they were unable to take many orders at all. And, because they were often required to take payment in advance, the company was at a great disadvantage against the competition.
Once the Export-Import Bank stepped in to offer the necessary backing, the company’s regular bank agreed to loan up to 90 percent of their overseas receivables as their working capital. This is where business really took off.
The money that their customers would owe them worked as their collateral for the loans that they needed to pay their employees, suppliers and even their taxes. And, since nearly 70 percent of the VoIP routers provider’s revenue was coming from exports, this meant that 70 percent of their line of credit was being backed by the Export-Import Bank.
On May 31, Patton’s temporary reauthorization will expire. If this is not renewed and if their lending cap is not raised, the company will be at a severe disadvantage against other U.S. companies when it comes to dealing with foreign customers.
This means that thousands of U.S. jobs could be lost.Without this renewal, the potential for Patton’s bank to demand payback immediately is definitely at play. In order to come up with this kind of money, employees will be cut. In fact, according to Patton, as many as 70 people could be without a job if this happens.
By losing 70 employees in a 100 employee company, you can see how this would adversely affect the company. Patton Electronics is asking Congress to reauthorize the Export-Import Bank before it’s too late to benefit the businesses and employees involved.They want to be able to ship their VoIP routers to more countries which means more U.S. jobs could be created. Once the client base grows and revenue is established, more people will become employed which is a win-win for everyone involved.
Edited by Juliana Kenny
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