If you're looking for a way to finance (or refinance) real estate or other fixed assets, banks may not be rolling out the red carpet for you. But don't rule out regional investment firms as sources to explore in today's market. While many regional firms seem to focus on peddling stocks and government bonds to individuals, some have distribution capabilities that can provide small businesses with opportunities to do long-term borrowing at attractive rates and terms.

One company that has benefited from this is Satellite Industries, of Minneapolis. The family-owned manufacturer of portable rest rooms, which employs 100 people, had financed its 52,000-square-foot headquarters and warehouse several years ago through a local bank. "But with our note coming due next year and interest rates low, it seemed like a good time to do something," says vice-president Todd Hilde. In April, with the help of Minneapolis-based Miller & Schroeder Investments Corp., Satellite was able to refinance nearly $2 million. Its 9.25% borrowing rate is fixed for 10 years, although the loan is amortized over 25 years.

To complete these types of deals, Miller & Schroeder taps into the investment appetites of some 1,500 small, rural banks, most of which are independently owned and are located in the Midwest. Unlike bigger metropolitan banks, notes vice-president Jerry Tabolich, most rural banks haven't suffered widespread portfolio problems. As a result, many of them are open to investments that allow them to diversify their assets beyond their immediate communities and to earn returns 1.5 to 5 percentage points higher than prevailing U.S. Treasury rates.

Miller & Schroeder began originating deals like Satellite's in 1988. To date, says Tabolich, the firm has raised money for companies in seven states, including Hawaii; this year it expects to raise about $100 million, with financing deals ranging in size from $500,000 to $7 million. As the underwriter, Miller & Schroeder takes charge of evaluating the credit of the borrowing company, paying particular attention to cash flow and collateral. Assuming the borrower passes muster, the firm puts together offering materials, which it sends to anywhere from 10 to several hundred rural banks. Once a bank invests (the minimum participation is usually $100,000) Miller & Schroeder services the loan; the banks, however, remain at risk.

In today's market, says Tabolich, the rural-bank deals can offer several advantages to small, private businesses. In addition to being competitive on rate, the terms, he notes, can be less stringent than those demanded by banks and insurance companies; if the credit is strong enough, for instance, personal guarantees may not be required. The turnaround time of the deals from start to finish generally runs 8 to 10 weeks, but a commitment, Tabolich says, can often be given within two weeks. -- Bruce G. Posner

* * *