Setting its sights on what it views as an underserved market, Chemical Banking Corp. is gearing up to provide investment services to small businesses.

The New York banking company is building a corps of financial planners to offer retirement plans, insurance policies, and other investments to companies with annual sales of $10 million or less.

The sales effort is expected to begin in September, according to Leonard Malkin, managing director of Chemical Investment Services, the company's brokerage unit.

Mr. Malkin said Chemical is in the midst of recruiting certified financial planners, though he did not disclose the number.

The bank also has begun educating branch managers about the new sales push, and is preparing marketing materials to support the effort, he said.

Building on N.Y. Ties

In pursuing small companies as investment clients, Chemical is building on its already considerable ties to the New York business market. The bank has tried to set itself apart in the metropolitan area as a lender to small-and middle-market businesses.

Mr. Malkin said he sees "tens of thousands of firms" as potential customers, though he would not specify how many small businesses are already on Chemical's client roster.

Paul L. Landolfe, a vice president who has been tapped to oversee the small business effort,. said the initiative represents a break from the way banks traditionally have approached small businesses.

For the most part, banks have viewed these companies as users of loans, payroll services, and other traditional offerings - and nothing more.

Though Chemical plans to go after a wide range of clients, it sees the service sector and professional firms, such as doctors' offices and law firms, as particularly promising, Mr. Malkin said.

Customers will be able to choose a mix of services to suit their requirements, Mr. Malkin said, "It all depends on their size and needs."

Chemical will deal with companies with annual sales as low as $1 million, Mr. Landolfe said.

The bank said it expects to gather leads by poring over customer files and by asking branch managers for suggestions.

One business owner said she welcomes the overture.

"We need it," said Sally Slacke, president of Slacke Test Boring, a soil testing firm in Kings Park, N.Y., that employees between five and 10 people, depending on the season.

Companies of this size "are often overlooked," she said.

Industry observers say that is because small businesses' size and uncertain staying power makes them questionable candidates for loans, much less investment products.

"They fall outside general parameters," said Eugene DeMark, managing partner of KPMG Peat Marwick, Jericho, N.Y.

But Chemical, with its existing business base, should be able to successfully serve these companies, Mr. DeMark said.

Mr. Malkin said Chemical is positioning the small business program as a key part of its expanded investment products effort.

The program, as originally envisioned, primarily would have offered mutual funds to branch customers as a joint-venture with Liberty Financial Cos., an investment products marketer in Boston.

Now, Chemical plans to operate the program in-house, using the brokerage as umbrella for a number of programs.

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