A new Internet company may become a central part of some big banks' efforts to beef up their services to small-business customers.

Large banks are eyeing the small- and midsize-business market more closely these days, in anticipation of the ramped-up efforts by new competitors such as American Express Co. and Merrill Lynch & Co. and by their stiffest competitors in this market: local banks. FleetBoston Financial Corp. is set to test an offering in collaboration with a one-year-old Silicon Valley company, Biztro, which is positioning itself as the soup-to-nuts company for small businesses.

The giant New England bank is already getting a taste of small banks nipping at its heels in the small and middle-market corporate business. Sovereign Bancorp of Wyomissing, Pa., is setting up a capital markets group to attract mid-market customers in New England, and Citizens Financial of Providence, R.I., has made clear its intent to pitch itself to smaller companies.

FleetBoston is hoping Biztro will differentiate its small-business efforts.

"The offering Biztro has is aimed squarely at what is a key concern of small businesses: how to operate their businesses in a more productive and less time-consuming manner," said Norman DeLuca, managing director of small-business services at Fleet.

Biztro has secured partnerships with Fleet Boston and regional Bell operating companies and others to market its services to their small-business customers.

"We want to be known as the Visa of the industry, to work with everyone," said Biztro's chief executive officer and chairman, Navin Chaddha, a former Microsoft executive who founded two other Internet start-ups. The company is expected to announce its partners and business strategy on Monday.

Biztro's strategy involves making deals with the companies small businesses need to run their back-office operations, such as telephone companies, insurance agencies, Internet service providers, and banks. Offering its service at no cost to small businesses, Biztro hopes to bridge the chasm between entrepreneurs and the companies that serve them.

"There have been no channels to the small and medium-sized businesses - until the Internet," said Regis McKenna, a noted Silicon Valley business strategist, who helped to put Apple Computer on the map in the 1970s.

By some estimates the small-business market in the U.S. comprises 7.5 million businesses with fewer than 100 employees and another 23 million home office businesses.

A recent survey conducted by the Consumer Bankers Association showed that more than 90% of banks intend to increase their sales staff devoted to small business as well as their product offerings to that market this year. Jupiter Communications analyst Melissa Shore said, "I can't point to a single financial institution that is doing a good job of meeting the multiple needs of the small-business owner."

Fleet's Mr. DeLuca acknowledged the competitive environment.

"Competition is more intense for the small-business market than it has ever been," he said. "There is lots of competition to own the entire customer relationship, and it comes from specialized product providers who are competing for a piece, like payroll providers, insurance providers, and credit card companies."

Mr. McKenna, who lives in Palo Alto, Calif., likened what Biztro is trying to do to Intuit's QuickBooks software, a financial program that helps companies manage their finances and back-office operations. Mr. Chaddha said Biztro works with companies that use QuickBooks. "We don't compete with [Intuit]; we enhance the market they have created."

Indeed, a number of Internet services cater to small businesses, but Mr. Chaddha maintains that none are in Biztro's space. "We are focused on back-office operations," he said.

"Our message to companies is 'Focus on your business,' " Mr. Chaddha said.

Ms. Shore said Biztro has "a smart strategy in place. They are trying to empower companies to improve their relationships with their customers."

Biztro has a two-pronged approach. It has forged partnerships with vendors such as office supply companies iPrint.com and PackageNet to provide discounts to small businesses that use Biztro. It also has relationships with banks, telephone companies, and Internet service providers that already have established small-business relationships. Biztro has signed deals with the portals VerticalNet, Concentric Network, and DSL.net.

FleetBoston has some 450,000 small-business customers that will have access to Biztro services. Fleet will initially conduct a pilot test with Biztro, offering the service to a select group of customers.

One aspect of the service is that it allows its primary partners - those that have an established base of small-business customers - the option to exclude the offers of competitors. So if Biztro signs a deal with another bank, as it hopes to do, the banks will not have access to each other's customers.

Biztro also signed a deal with M&I Data Services, a third-party data processor that provides business electronic banking services for 18 of the top 20 U.S. banks. M&I Data Services is owned by the bank holding company Marshall & Ilsley Corp.

In 1995 Mr. Chaddha founded Vxtreme, an Internet media streaming software company, and two years later he co-founded iBeam Broadcasting.

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