When Connecticut entrepreneur Bill Lytle began seeking a loan for his start-up manufacturing business, he wanted to build a long-term relationship with a bank based in New England.
Mr. Lytle said he submitted his business plan and financial information last August to two large regional banks and a local one. The bankers promised to respond but did not return his telephone calls and left him waiting for weeks. That is when Mr. Lytle turned to a local branch of First Union National Bank.
He did not expect representatives of the Charlotte, N.C.-based First Union Corp. subsidiary to be responsive to a small business in West Haven, Conn. But the bank surprised him, granting an SBA-guaranteed loan and credit line in less than a month. Mr. Lytle's experience illustrates how rarely entrepreneurs get responsive and efficient customer service.
"The people at First Union were really interested in doing the deal," he said. "The other banks talked about their programs and sent us literature, but it was up to us to pursue them."
Christopher J. Earle, vice president in First Union National Bank's government-guaranteed lending department, said he approved the SBA 7(a) loan and credit line on the basis of the business experience of Mr. Lytle and his vice president and the strength of their business plan.
The borrower, Advanced Dispensing Systems, had been founded in April 1997 and makes coffee bean grinding machines for supermarkets.
Mr. Lytle's product, the Bean Machine, is used in five Connecticut groceries. Its motorized system pours a measured amount of beans into the grinder, reducing spills in store aisles.
Mr. Lytle, who has operated his own plastic-product factory since 1972, and vice president Fred McKinney, who previously was a coffee bean distributor, are African-American entrepreneurs who had financed their operation with their own savings and money from private investors.
First Union's loan to Mr. Lytle was one of eight that helped the bank earn an award from the SBA for making the most loans to African-American entrepreneurs in Connecticut.
The SBA recently announced a plan to double the number of loans made annually to African-American borrowers. The national target is 9,300 such loans for the 12 months ended Sept. 30, 2000.
Mr. Earle said bankers tend to shy away from businesses that are less than a year old. But First Union offers SBA loans with longer repayment schedules and lower monthly payments than conventional bank loans. Mr. Lytle and his vice president "brought a lot to the table," Mr. Earle said. "With a lot of other banks, if you say 'start-up,' they just say 'no.'"
Two of the other New England bankers eventually phoned him to offer loans, Mr. Lytle said, but that was in mid-October, nearly six weeks after he had closed on the SBA deal with First Union.
Mr. Lytle said he initially feared that an SBA loan would require too much collateral and higher interest rates. He said First Union was willing to negotiate the collateral requirements but would not bargain on rates.
Now Mr. Lytle said he plans to use more First Union services. The North Carolina bank did not ask him to transfer his business checking account, which is with a local bank, but he said he plans to move it as soon as First Union sets up a direct deposit payroll system for his employees.
"We want to have a business relationship with them so they can consider us when we have other needs," Mr. Lytle said.
