When it comes to the country stores that dot Vermont's landscape, Chittenden Bank knows the deal.

The $1.2 billion-asset bank dominates the state in smallbusiness loans. And, because it has so many Mom and Pop stores on the books for comparison, it can review loan applications very quickly, says Louise Sandberg, vice president and head of small-business lending.

'Preferred Lender'

Earlier this year, Chittenden picked up yet another competitive weapon: status as a "preferred lender" under the Small Business Administration loan program.

That means the bank has the authority to approve SBA loan applications in as little as 24 hours, rather than the usual three days.

Chittenden's appetite for small-business credits is increasingly evident in the bank's balance sheet.

Business loans now account for 40% of total loans, up from 35% in 1991, according to the Advest Group brokerage firm. And the bank plans to increase small-business loans to 50% of the pie.

41 Branches

"They have a well-thoughtout game plan," said Frank Barkocy, an Advcst analyst. "Down the road, I think they have a good opportunity if they stick to their knitting, although Vermont is not going to be an explosive market by any means."

While some competing banks have to send loan applications to corporate headquarters outside the state, Chittenden deals with its small-business customers locally through 41 strategically placed branches, Mr. Barkocy pointed out.

To differentiate itself, Chittenden has empowered experienced loan officers to make decisions on most smaller loans.

"I think that in Vermont people like to talk to the decisionmaker" Ms. Sandberg said.

Officers Initiate Business

These same officers also make initial calls to potential loan customers instead of having business development people call them, she said.

Not having a customer deal with numerous bank employees limits confusion, she added.

A team of 13 loan officers handle small businesses. Most team members have been with the bank for more than five years and took a year-and-a-half training program at Chittcnden in the late 1980s, she said.

Small-business lending, especially the SBA loans, represents less risk and a strong profit potential, Mr. Barkocy said.

Refinancings Strong

For fiscal year 1993, Chittenden made 99 SBA loans for a volume of$15 milliond That put the bank ninth in the nation for SBA loan origination.

Much of the recent smallbusiness activity has been in refinancing, as small businesses moved to take advantage of unusually low interest rates.

Though rates have been moving up lately, Ms. Sandberg said the bank is looking for smallbusiness lending to grow 10% annually over the next few years.

Mr. Moore is a freelance writer based in Vassaiboro, Maine.

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