Service at small banks wins over businesses

By Joyce M. Rosenberg
Associated Press

NEW YORK — Ann Taylor, who owns a public relations firm in Houston, had been using the same regional bank for five years when she decided to ask for a line of credit for her company.

Much to Taylor's surprise, the request was turned down. Although she had more money on deposit at the bank than her company, Paradigm Communications, was seeking, the bank considered the line of credit too small to bother with.

"I was stunned," Taylor said. So was her accountant, who had accompanied her to the meeting with the loan officer.

Taylor ended up doing what many other small company owners do: migrate to smaller banks they find more accommodating and eager to work with a small business. These are banks that, because of their own size and focus, are able to give more attention to a smaller company, be flexible with lending and charge less for checking and other fees.

Many businesses benefit by moving to smaller banks.

Mike Kiser, owner of Small Business Advisers, a Pewaukee, Wis., consultancy, said of company owners: "What they're trying to do is set up a good, long-term relationship with someone that will be an adviser to the business. They want to be talking to an individual who is experienced, who has loaned money to many, many small businesses, and who understands the nuances of the size of a business."

Jennifer Hawkins already had a business track record with a big New York bank, but when she tried to get a line of credit for a new venture, she said she was never able to get a real response or talk to the same person twice. She moved to a bank that had only four branches and was anxious to give her personal service. "I needed someone to help guide me," she said.

The big banks are well aware of such criticism and, hoping to win small-business customers, have come up with accounts that have lower fees or even no fees, and business credit cards that award frequent-flier miles. Some are making financial advisers available to business customers who keep a minimum balance on deposit.

Kiser suggests business owners do plenty of research not just into the bank, but a particular loan officer, the person who's likely to be most closely involved with the customer. Find an officer you're comfortable with, he said.

Alice Magos, a senior writer/analyst at CCH Inc., a financial information firm, says owners should interview several banks, asking such questions as, "What fees do you charge for various kinds of transactions? Do you charge for every deposit? Are you part of the Small Business Administration loan program?"

Perhaps most important, Magos said: "Do you people understand my business or my kind of business? Will I be with a specific officer each time I come in, or are you going to shuffle me around?"