For as long as General MedVentures, in St. Louis, has banked at Mark Twain Banks, the St. Louis lender has summoned together groups of like-minded businesses and conducted sessions on such universal mysteries as cost cutting. The workshops are so habit-forming, confesses General MedVentures CEO Thomas Muchisky, that "they tie you to the bank." Those close ties paid off recently when General MedVentures (a manufacturer of medical equipment and a distributor of X-ray products with $70 million in 1995 sales) had a crack at stockpiling a batch of X-ray film at a bargain price that promised to increase margins months down the line. The company already had a $12-million line of credit but needed an instant $10 million more to pull off the deal. Getting the money was unlikely, since at that level of borrowing General MedVentures would have become the bank's largest single customer overnight. But the response from the loan committee was music to Muchisky's ears: "You've been with us for so long, so OK, we'll do it."
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Does it find customers for you?
Banks are in a perfect position to act as a clearinghouse for enterprise, actively bringing businesspeople together. Chemical Bank in Rego Park, N.Y., sponsors breakfast and lunch gatherings of middle-market entrepreneurs like Tony Racioppo, at which more than ideas are exchanged. The swapping of business cards spawns "great networking opportunities," says Racioppo, CEO of Security Delivery Service, in Long Island City.
A science museum in Southern California uses Union Bank, the same Woodland Hills, Calif., institution used by garment manufacturer Flap Happy, based in Santa Monica. When the bank found out that the museum's gift store was gearing up for a line of clothing, it sent the store to see Flap Happy founder Laurie Snyder, who ended up selling some hats in the store.
Not only did First American Bank, in Nashville, lend $80,000 to Richards & Richards founder R. Stephen Richards in the early years of his Nashville record-storage service, but later it also shored up his ability to pay it back by signing on as his biggest customer.
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Does it send you searching?
Bankers volunteer to reformulate your accounts for maximum yield and minimum interest. Banks publicly 'fess up to their mistakes. Loan officers travel all day to get to your plant, park themselves at construction sites to supervise progress, and ride around in company vehicles to study your operation. Presidents grant loans over coffee and greet you in their own lobbies. Lenders play matchmaker between you and your next customer. Credit formulas let you borrow against future sales or even on pure faith. Pinch yourself, but it's true: commercial lending institutions are actively wooing small companies.
On the other hand, this is no mass redemption. Nothing puts a kinder face on the country's lending institutions than easy money -- but why cavil? If your banking partner isn't up to making the accommodations illustrated here, there are plenty more that are. It's a buyer's market out there, a time for small businesses to comparison shop with uncharacteristic confidence and boldness. So kick some lending-provision tires, test-drive some banking services, turn the dials of bank-to-business communication, and sound out fees. But these auspicious times aren't going to last forever. So take action soon, before the inevitable return of tight money blinds bankers' eyes once again to the rewards of small-company growth.
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Research assistance for this article was provided by Jerry Useem and Brac Selph.
THE BANK THAT GETS IT
To find CEOs with horror stories about their banks, you don't need a very large survey pool. If you talked to Jim Matras of Interstate Transportation Services, in Madison, Wis., for instance, he'd tell you how his former banker fell asleep during a one-to-one meeting.
Ask Adrian Lugo about his bank, though, and the accolades might continue for the better part of an hour. The owner of Lugo Construction, just outside Seattle, will tell you how his banker's business advice has been more valuable than any professional consultant's. And how his banker taught him how to speak bankese. And how this banker -- a 30-year veteran at $16-billion Seattle First National (Seafirst) Bank, in Seattle -- thinks and acts like a small-business person.
Yes, outstanding banks and bankers actually do exist. Lugo says his Seafirst "relationship manager" of 10 years, Glenn Yamada, has been a key reason for his general contracting firm's 10-fold growth in as many years. Besides extending Lugo a $500,000 line of credit, Seafirst has granted him several six-figure loans on short notice. (Once Yamada got him $110,000 within a day.)
Yamada is part of Seafirst's middle-market division of 6,000 companies, meaning he deals only with businesses comparable in size with $20-million Lugo Construction. Yamada's experience with companies going through similar growth is key, says Lugo, because it allows him to warn Lugo about potential problems before they arise and to suggest management solutions. Recounts Lugo: "Glenn told me ahead of time, 'It looks like you're entering a phase here where people are going to start head-hunting your personnel -- you'd better make sure you have a good program for your key people.' And sure enough, it started happening." Lugo put together a new benefits package just in time to persuade two crucial employees to stay.
Yamada also told Lugo that his company had reached the size at which friends would start asking him for loans, and that some of those loans would inevitably go bad and drain his cash flow. "And sure enough, it started happening." Lugo now rarely lends money.
