Customers Speak: Borrowers Putting Themselves in the Driver's Seat

When Michigan entrepreneur Chris B. Miller needed a loan to buy a pair of franchise auto-service shops, he wanted to make sure he got the best deal.

So he shopped.

Mr. Miller first negotiated a $1.25 million Small Business Administration loan from Money Store Inc. last June. Then he went to First Chicago NBD and $115 million-asset United Community Financial Corp. to ask them to beat the deal.

"I was in a good position because I could play them against each other," Mr. Miller said.

When the community bank subsidiary, United Bank of Michigan in Grand Rapids, put together a more competitive loan package for the business acquisition, commercial real estate and working capital, Mr. Miller went back to Money Store.

"I was almost a little embarrassed to go back to them and ask for something better, but business is business," said Mr. Miller, owner of two Tuffy Auto Service Center franchises.

Mr. Miller, who ran a successful retail shoe business before getting into auto care, is part of a growing number of savvy small-business owners who are forcing lenders to compete for their business, destroying the stereotype of the small-business owner begging for financing.

"If it's a competitive transaction with strong cash flow and previous management experience, that happens quite a bit," said Greg O'Dell, Money Store's business development officer in Flint, Mich.

Mr. Miller convinced Money Store to extend the terms of its initial loan offer, waive some of the fees for document preparation and closing, and offer him a larger loan for working capital.

Bankers point out, however, that Money Store isn't the only small- business lender willing to bargain for business.

Patricia Julien, a vice president at United Bank of Michigan, said the Grand Rapids bank is willing to negotiate loan terms and rates with qualified small-business borrowers. The only constants are the fees set by the SBA.

"As a smaller bank, we only deal with the small businesses," Ms. Julien said. "We're never going to be able to lend to the big businesses."

Although Money Store doesn't have the same name-recognition as banks do in local markets, Mr. O'Dell said the finance company offers better service because it specializes in SBA lending.

"With the Money Store, small-business owners don't have to worry about those nightmare situations that come up with banks that only do one or two SBA loans a year and don't know understand the paperwork," he said.

Though Mr. Miller's only business borrowing relationship is with Money Store, he deposits his business earnings at a First Chicago NBD branch across the street from one of his auto service centers.

Tuffy, which services mufflers, brakes, and exhaust systems, maintains corporate agreements to use one financial institution to process credit card transactions, another to process checks, and a third to provide short- term credit for customers.

Thus the banking business of Mr. Miller's franchises - including a primary relationship with a nonbank lender - is scattered among at least five financial institutions.

Despite banks' efforts to create a sales culture, Mr. Miller said lenders have not initiated contact to offer loans or credit lines for his six-month-old business.

"I get approached to switch phone systems every other day," he said, "but I haven't been approached by any other banks" besides the ones he initially pursued.

A First Chicago NBD banker did invite Mr. Miller to lunch shortly after he opened his two shops to discuss his banking needs.

"It's kind of nice and makes you feel like they want your business," he said.

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