State Trade Expansion Program (STEP)

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A federal grant program that provides financial support to U.S. small businesses for export development activities through state and territory agencies.
What are the main aims and objectives?

The State Trade Expansion Program (STEP) has three primary objectives established by the Trade Facilitation and Trade Enforcement Act of 2015: to increase the number of U.S. small businesses that export, to increase the dollar value of exports by small businesses, and to increase the number of U.S. small businesses exploring significant new trade opportunities. The program addresses a fundamental challenge facing American small businesses—that while 95% of the world's consumers and two-thirds of all purchasing power are located outside the United States, many small businesses lack the resources and knowledge to access international markets. STEP seeks to overcome these barriers by funding activities that help eligible small business concerns compete in the international marketplace and explore new export markets. The program operates on the premise that small businesses need support to cover costs associated with entering and expanding into international markets, such as attending trade shows, participating in foreign trade missions, and developing international marketing materials.

How does the program work?

STEP operates through a two-tier federal-state partnership model. The U.S. Small Business Administration's Office of International Trade awards competitive grants to state and territory governments, which then provide direct support to eligible small businesses within their jurisdictions. Each year, the Small Business Administration (SBA) issues a Notice of Funding Opportunity to eligible state entities, and state governments submit competitive applications for funding. Award amounts typically range from $100,000 to $900,000 per state or territory.​

States receiving STEP grants must provide matching funds. Most states contribute 25% of the direct cost of program-eligible expenses, while high-export-volume states (California, New York, and Texas) must provide 35% matching funds. Federal law requires that at least 85% of the federal award funds go directly toward supporting eligible small business concerns, rather than administrative costs.​

The program operates on a reimbursement basis for qualified small businesses. Eligible small businesses apply to their state's STEP program for support with specific export-related expenses. To qualify, businesses must be U.S. owned and operated, be headquartered in a participating state or territory, meet SBA size guidelines for eligible small business concerns, have been in business for at least one year, and produce exportable products with at least 51% U.S. content. Businesses must also demonstrate understanding of costs associated with international trade and have sufficient resources to bear the initial costs before receiving reimbursement.​

STEP funds can be used for a wide range of export development activities. These include participation in foreign trade missions and market sales trips, exhibitions at international trade shows, subscriptions to services provided by the U.S. Department of Commerce and other federal agencies, translation fees for marketing materials and websites, design of international marketing products and campaigns, export training workshops and educational activities, reverse trade missions, procurement of consultancy services, support for website globalization and e-commerce capabilities, trade credit insurance, and compliance testing for entry into export markets. This flexibility allows states to customize support based on the specific needs of their local small business communities.​

Awards are typically made for a 12-month base period with an optional 12-month extension period, totaling up to two years of performance. States manage the programs locally, reviewing applications from small businesses, approving eligible expenses, and processing reimbursements after businesses complete their export activities.

What is the overall cost?

In fiscal year 2024, the SBA allocated $20 million (approximately $20 million USD) for STEP grants, distributed to 43 state and territory international trade agencies. This $20 million annual funding level has been consistent in recent years. For fiscal year 2026, the program has authorized $20 million in funding.​

How was it implemented?

STEP was authorized by Section 1207 of the Small Business Jobs Act of 2010, signed into law by President Barack Obama on September 27, 2010. The program was initially established as a three-year pilot program designed to test whether federal support channeled through state agencies could effectively increase the number of small businesses that export and boost their export values.​

The SBA's Office of International Trade was designated as the implementing agency for STEP. The pilot program began awarding its first grants to states in 2011. During the pilot phase from 2011 to 2015, the program underwent evaluation by the SBA's Office of Inspector General to assess its management and effectiveness. Following the successful pilot phase, the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644), signed into law on February 24, 2016, made STEP a permanent provision of the Small Business Act.​

The implementation model relies on existing state-level export assistance infrastructure. States and territories apply annually for STEP funding through a competitive application process. Applications are evaluated through a two-tier review process that examines project design, collaboration with partners, benefit to small businesses, data collection and reporting plans, and past performance for returning applicants. Once awarded, state agencies recruit and select small businesses, manage reimbursements, track performance metrics, and report results to the SBA quarterly.​

The program has grown steadily since its inception. In 2022, STEP reached its highest number of grantees (52 states and territories) since the program began. By fiscal year 2024, demand for the program had grown significantly, with states and territories requesting over $39 million in funds—nearly double the $20 million available.​


 

What impact has been measured?

Since its launch in 2011 through 2024, STEP has provided direct support to more than 18,000 small businesses across the United States. The program has generated over $6.8 billion in total export sales, representing a substantial economic multiplier effect. These supported businesses have expanded their footprint across over 100 countries, with STEP activities helping U.S. small businesses enter 141 different international markets.​

The program demonstrates strong return on investment. In 2022, every dollar of STEP funding yielded $43 in export sales. By 2023, the ratio adjusted to approximately $27 in export sales for every dollar of STEP funding. Individual states have reported even more impressive results. Michigan has facilitated nearly $6 billion in small business export sales since the program's inception, achieving a return on investment of 328 to 1. Washington state has supported more than 1,600 unique small businesses who realized over $600 million in sales over 11 years, representing a 52 to 1 return on investment. Idaho achieved a 57 to 1 return on investment between 2017 and 2019, with 63% of awards supporting rural, woman-owned, or veteran-owned businesses.​

The program's success has been recognized through multiple evaluations. A 2021 evaluation by external evaluators examined whether STEP grantees were increasing the value of small business exports, reaching new clients, and producing new exporters, while also identifying which activities contributed most to client outcomes and what best practices improved results. The evaluation provided insights into how STEP grantees could increase exports and identified best practices for program implementation.

What lessons can be learned?
  • Funding demand significantly exceeds supply. In fiscal year 2024, states requested nearly $39 million against only $20 million available, leaving substantial unmet demand. This constraint limits the program's potential reach and prevents many qualified state programs from receiving adequate funding.​
  • Performance measurement systems require ongoing improvement. A 2019 audit by the SBA's Office of Inspector General found that the agency needed to strengthen performance measures and program oversight. The audit concluded that without improving existing performance measurements and providing more effective oversight, the SBA risked not fully realizing the program's impact in increasing small businesses exploring new trade opportunities.​
  • Data reporting lags create challenges for timely evaluation. Export sales data are reported quarterly by grantees but remain preliminary until grant completion, which can take two full fiscal years. This delay makes it difficult to assess real-time program effectiveness and adjust strategies accordingly.​
  • Reimbursement model creates barriers for under-resourced businesses. Because STEP operates on a reimbursement basis, participating businesses must have sufficient capital to initially fund activities before receiving payment. Combined with the 25-35% matching requirement that states must meet, this structure may disadvantage smaller or less-capitalized businesses that could benefit most from export support.​
  • State capacity varies significantly. States with established export support infrastructure and experienced staff achieve better outcomes than those with less developed programs. This creates geographic disparities in program effectiveness, with some states consistently delivering higher returns on investment while others struggle to maximize impact.​
  • One-year eligibility requirement may exclude early-stage exporters. While STEP aims to create new exporters, the requirement that businesses have operated for at least one year excludes startups and very early-stage businesses interested in international markets.

CURATED BY

Tom Hancock

Research Associate
Global Entrepreneurship Network
United Kingdom