Tai-Dan Hsu financed his business the way many entrepreneurs do. After paying a finance company's high rates, he progressed to a Small Business Administration loan. After seven years, he finally secured a conventional bank loan.

When his Lakewood, Colo., engineering consulting firm needed money to finance an acquisition, though, Mr. Hsu's lenders at Bank One Colorado took nearly two months to make a decision. So Mr. Hsu went to the local Merrill Lynch office and got a loan in two weeks.

"The bank was very cautious," Mr. Hsu said. "They wanted to review our business plan and review it and review it. I don't know how many layers of management had to look at it. But finally we got tired of waiting."

Mr. Hsu, president and owner of Pacific Western Technologies, used the $400,000 credit line and $800,000 10-year term loan from Merrill Lynch to acquire an information management company last May.

"The bank was not able to provide the aggressive loan program we needed," he said.

Mr. Hsu said his company still keeps its business checking account at Bank One. But he said Pacific Western will continue to finance acquisitions through Merrill Lynch.

The Colorado entrepreneur's actions are not unique. According to a new Consumer Bankers Association survey, 79% of the 35 banks asked named Merrill Lynch as a key competitor. That's up from 60% in the previous annual survey.

Greg Vartanyam, Bank One Colorado's market manager for business banking, refused to discuss Mr. Hsu's loan but said such foul-ups are often caused by a misunderstanding between the loan officer and the borrower.

"Our goal is to let customers know right away if we can help them, and if we can't, we try to recommend someone who can," he said.

Acquisition loans usually require more work than other business loans because borrowers typically take on large amounts of debt and may not have tangible assets for collateral, Mr. Vartanyam said.

If Bank One has all the necessary information, it can decide on such a loan within two days, he said.

"In a competitive environment like this, you can't sit on a credit application without the risk of losing a customer," he said. "Everyone is after everyone else's customers."

Charles Wendel, president of Financial Institutions Consulting in New York, said acquisition loans offer a good opportunity for competitors to steal bank customers. The entrepreneur feels pressure to get the money quickly to complete the acquisition, but the bank needs to review the business plans carefully to make sure the merger will work, he said.

Banks should communicate with their small-business customers frequently during the application process to prevent them from shopping around for a loan, Mr. Wendel said.

"It's a lot harder to get a customer back than it is to sell to your existing customers and keep them satisfied," he said.

Merrill Lynch typically goes after the larger, more profitable small- business owners who would be likely to use the brokerage firm to manage their personal assets, Mr. Wendel said.

Pacific Western Technologies, which was founded in 1987, has $10 million of annual sales and 175 employees who provide consulting services.

Mr. Hsu tied for the SBA's National Minority Small Business Person of the Year, an award for entrepreneurs who use the SBA's programs and are active in their local community.

Merrill Lynch employees courted his business for two years before he used them, Mr. Hsu said. Other financial services companies call him, he said, but he doesn't plan to switch.

"I don't feel like it is right to change too frequently," he said. "Once I feel pleased with a relationship, I like to maintain it."

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