American Express and Advanta Corp. are sampling small-business owners' appetites for office equipment leases.
For the past two months, the companies have been offering American Express' small-business corporate card customers a line of credit for the equipment, typically big-ticket items like computers and telephone systems.
The partnership links New York-based American Express' expertise and leadership in corporate card lending with Horsham, Pa.-based Advanta's knowledge of underwriting leases.
Under the program, when a cardholder receives a statement from American Express, he may choose to lease a purchase by checking a box on the bill. If he does so, Advanta sends a contract, and the customer makes payments to American Express.
The lease gives the customer a way to extend payments on purchases. At the end of the lease, the customer can pay Advanta $1 to buy the equipment.
Albert E. Lindenberg, vice president of Advanta Business Services, which is based Voorhees, N.J., said the process of requesting a lease through the mail rather than at a store saves cardholders time and money.
"It takes the hassle out of leasing at the point of sale," he said.
Advanta is offering the credit through Advanta Leasing, a 10-year-old division of Mr. Lindenberg's business unit.
Advanta, however, is not offering the leasing option to its own MasterCard small-business customers. The program, only two years old, said Mr. Lindenberg is too new.
"Until Advanta is more than a dot on the map of corporate cards, this partnership with American Express seems like a no-brainer," said Shelly Porges, chief executive of Porges-Hudson Marketing, San Francisco.
Industry observers say they believe that American Express views the partnership as a way to defer the risk of managing lease underwriting.
"American Express is cautious about how it expands its revolving business," said David Robertson, president of The Nilson Report, Oxnard, Calif. "This is a way for them to share the risk."
Underwriting equipment leases is different from managing other types of credit, said Ernest Berger, American Express' vice president of small- business services, "and that is a key asset that Advanta brings to the table."
Since the end of last year, American Express has been testing a revolving small-business card. Its other three products all are charge cards.
Also, for the past few months American Express has been testing a preapproved line of credit for small-business owners with Banc One Corp.
American Express spokeswoman Nancy Muller said the company is looking at other programs, such as loans, to provide small businesses with capital.
"Our basic goal is to broaden our relationship with the small-business community," she said.