This may be a time of great opportunity for entrepreneurs, yet many a promising business deal never gets financed -- not because the opportunities don't exist, but because the needs are simply too complex for the average commercial banker. It is a common story. Confronted with a business he does not understand, and pressure to act quickly, the typical loan officer more often than not takes the safe course and says no.

But the world of banking is changing -- as we have noted before (see "The New Small Business Bankers," INC., May, page 112) -- and lately some entrepreneurs and would-be entrepreneurs have been finding that they don't have to take no for an answer, even when the deal is as complex as a leveraged buyout. Consider the case of Bob Phillips, Gary Edman, and Charles Stewart, three corporate vice-presidents in Phoenix who teamed up to purchase the company they worked for, Chambers Belt Co.

Chambers had been making Western belts since 1947, first as an independent company and more recently under the ownership of a Phoenix company, The Victorio Co. For years, it had been a stable and profitable business. Then came the movie Urban Cowboy, and the Western-wear craze. Sales shot from $8 million in 1979 to $14 million in 1982 -- only to plunge back to $8.5 million in 1983. As the market collapsed, Chambers began to lose money.

Phillips and his fellow managers felt that they had some good ideas about how to make Chambers into a profitable and growing business again. They would work off the surplus inventory as quickly as possible, and then broaden the company's position in the market with non-Western products. They believed, moreover, that they might be able to acquire the company from American Financial Corp., the financial conglomerate that had taken control of Chambers Belt in late 1982. "I had worked for another large company for many years," says Phillips, 41, who was in charge of marketing. "It didn't seem likely that a huge conglomerate like American Financial would be interested in operating a Western-belt manufacturer for long."

The managers made some inquiries, and found that the new owner would indeed be willing to sell. Other bidders were already interested, and the price tag, the group learned, would be between $4 million and $5 million. Financing the purchase was apt to be difficult, however, because none of the three had capital to speak of beyond the equity in their houses. "We really didn't know what we were going to do," says Phillips. "We didn't know where to start, and we only had about two weeks to pull everything together."

The managers gathered together the company's financial statements and then, as a team, they proceeded to approach Phoenix banks and other local sources of money. The frustrations began almost instantly. At the first bank, the group outlined their plan and their needs. The bank wouldn't want to consider the loan, however, until the managers could show about $500,000 of new equity. What's more, says Edman, the finance vice-president, "We were told it would be impossible to get a loan approved without going through several layers of committees."

At a second large bank, the story was very much the same: No deal would be considered until there was new equity, and the bank wanted the managers to find someone with strong credit to personally guarantee the loan.

As it happened, equity was a real problem for the group, and finding reasonable investors who were able to respond quickly was proving difficult. "We found one person who wanted 51% of the company for investing less than $800,000," says Phillips. "Another guy offered to cosign our bank notes -- provided we paid him $200,000 a year for five years."

"We learned that there were a lot of sharks out there," Edman recalls. Meanwhile, time was running out.

Just when the managers were beginning to doubt whether their deal would ever come off, they happened to contact Thunderbird Bank in Phoenix. They arranged an evening meeting with John Hansgen, executive vice-president of the bank and head of the business loans division. He said that he would stay at his office late and that they should bang on the window when they arrived.

Phillips and the others knew little about Thunderbird, a small bank with assets of about $180 million. They fully expected that Hansgen would immediately bring up all the issues that the other bankers had raised. But instead, Hansgen listened carefully to what the managers had to say. "We explained how we could turn around the losing situation," recalls Phillips. "We wanted to add some new product lines and to turn the inventory [almost $3 million of raw leather] into products rather quickly."

Hansgen asked the three managers about themselves. He wanted to know about their backgrounds and how they got along with one another. "They seemed very practical," says Hansgen. "They knew that they had some straightening out to do, and they knew where they were going." While the managers sat in the office, Hansgen took a few minutes to study the numbers. Then, much to their surprise, he began to rough out how the $4-million management buyout might be structured.

Although Hansgen didn't want to commit the bank to the deal right then, he was very encouraging. The assets and the overall numbers looked pretty good, he told them, and the business seemed to be priced fairly. So how could the deal be done? The first piece, he suggested, might be a $550,000, 10-year loan, guaranteed 90% by the Small Business Administration. The loan would be collateralized by equipment. With the guarantee, it would be almost risk-free to the bank. Because it was a relatively long-term loan, moreover, it would assist the company's cash flow during its turnaround.

For the next piece, Hansgen suggested a loan from the bank against the value of Chambers's inventory. The raw-materials inventory in leather was worth about $2.9 million, and Thunderbird would lend 50% of the value, or $1.4 million. The two loans together would provide the managers with about $2 million.

To meet the $4-million total, however, there had to be other sources of money. For starters, Hansgen suggested a second bank loan -- a revolving line of credit against accounts receivable. A line based on 80% of qualified receivables, he figured, could provide up to $1.2 million. Although Thunderbird's lending limit per company was $1.5 million at the time, Hansgen told the group not to worry: He would find another bank to take part of the loan.

Minute by minute, the deal seemed to be falling into place. Hansgen, recalls Phillips, "was able to think very quickly." Unlike other bankers they had met, "he was a decision-maker. His approach was, 'How do we do it?"

Indeed, Hansgen was also willing to help solve the equity problem. The three managers were planning to remortgage their houses, they told him, but that would raise only about $150,000. Other investors they had met simply wanted too much. Hansgen, who had been a stockbroker before he switched to lending 13 years ago, said he knew some private investors who might want to look at the deal. He telephoned one of them that evening.

As it turned out, the investors were interested. Based on Hansgen's recommendation, a group of investors agreed to review the project, and within a couple of days, four individuals put up a total of $600,000. Of that amount, only $200,000 was to be in the form of common stock, valued at 15% of the company. The remainder would be a convertible debenture with a 15% annual coupon. Management, meantime, would have the option of buying the convertible debenture back after the third year in order to avoid further dilution. At one point in the negotiations, in fact, Hansgen intervened and told the investors they were asking for too much.

Within a few days, all of the details of the $4-million package came together. The offer was accepted, and the deal was signed and sealed in March of 1983 -- about three weeks after the process had begun. Since then; the new owners have succeeded in introducing a new line of rifle slings and holsters for hunters, and a line of belts with Disney characters for children. Last year, says Phillips, the business broke even on sales of $7.5 million. And for 1984, he expects it to earn about $700,000 on $8.5 million in sales.

For his part, Hansgen says he has no regrets about getting involved with the Chambers buyout. Already, he says, the new management team has paid down its loans by more than $900,000, and last June the bank lowered the interest rate it charges from the original two points over prime to one point. "This isn't the kind of company that's apt to go public," Hansgen notes. "But it's proving to be a very solid business. When I looked at it, I sensed that there was an awful lot in place. But bankers don't always give things a proper look-see. . . . A lot of times, they just run."