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Even among successful small businesses, there are always those that cannot make their loan payments on time.

The problem is that "they have a lot of money in receivables, but no money to pay their bills," according to Ken Buchele, the senior vice president of commercial lending at $113-million Emporia State Bank and Trust Co. in Kansas. "Then they come to us for more loans and wonder why we can't lend them more."

To turn these borrowers into better money managers-and, in turn, more profitable customers-Emporia last year began offering free online financial seminars taught by Business Resource Services Inc. of Seattle in conjunction with the University of Wisconsin-Madison Graduate School of Banking.

Webcasts Done Twice Annually

Twice a year about 30 customers watch a live webcast projected onto a large screen in a room at a local technical college. During the presentation, customers learn how to price their products better, how to better manage cash flow, and when-and when not-to borrow more money.

Throughout the seminar, customers can ask questions of both the presenter and Emporia's staff, who are there to help calculate standard financial ratios on mock-up worksheets. The interactive experience really seems to help Emporia's customers "get it," Buchele said.

"They just don't get information in a book that they can just stick on a shelf later and for-get it. With our loan officers helping them, our customers really learn right there and then how to apply these concepts to their own businesses."

More and more banks like Emporia are realizing that it's not just consumers that need financial literacy training. Inexperienced business owners could really use some education, too, in order to survive-and remain bank customers.

The emergence of the Internet has enabled even the most remote banks to educate their customers with the aid of out-of-town consultants.

Vicki Kraai, the president and chief executive at $20-million Sutton State Bank in Nebraska, said using the web was the only way she could afford to give her customers free seminars.

Each Business Resource Services webcast costs about $500, compared with the roughly $4,000 it would cost to fly a speaker to Nebraska for a two-day live presentation-the minimum time frame most speakers offer, she said.

The expenditure seems to be paying off. Sutton picked up a new business customer from a referral made during a November seminar-the same presentation that Emporia's customers were viewing at the same time roughly 300 miles away.

Kraai predicts that the new business generated from the seminars should help the bank nearly double its small- business loan portfolio by the end of next year, to $1.2 million.

She also expects that existing customers, armed with new management tools, will be able to grow.

"We want to help our clients, so that we can add more quality loans to the books," she said.

Steve LeFever, the chairman of Business Resource Services, said that it has been presenting online seminars since February 2001. More than 200 of its clients-mostly community banks -give their customers the online presentation, while another 100 or so prefer more traditional, on-site presentations.

University National Bank in St. Paul has shied away from the Internet and prefers instead to have local experts speak to its customers in person.

Rather than educating them about financial management, though, it tailors each session to industry-specific topics that its customers may enjoy, according to CEO David Reiling.

For example, University has a lot of customers who own apartment buildings, so it regularly holds seminars on how to be decent landlords, as well as how to pick good tenants-and kick out bad ones.

"If they have bad tenants, our collateral gets trashed," Reiling said. "Our loan payments are dependent on good relationships between stable tenants and land-lords who aren't slumlords."

Pays Off All Around

University also uses its own customers, such as attorneys or contractors, to teach the seminars, which are held at various restaurants owned by other customers.

"The customers get together and network with each other, multiplying each other's business, which means more deposits and loans for us." It has been putting together its own seminars for three years, and Reiling said that he has no doubt that they are one of the main reasons University's assets increased by 43% in 2001, to $48.8 million at the end of that year, and another 72% last year, to $83.8 million.

"This is the best marketing tool we have-we give them something that they can really use, not to mention a free lunch, and we get lots of business," he said.

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