NationsBank Corp. has created a unit to provide secured working capital to small businesses.

NationsBanc Small Business Credit, which is part of the North Carolina banking company's factoring subsidiary, was organized to serve a niche the company says it had ignored: merchants who need $1 million to $5 million in working capital.

"We wanted to fill in a part of the market we weren't specifically serving," said Kevin Moore, senior vice president of the unit. "There are a lot of smaller companies that want financing on a working-capital basis."

Instead of getting the deals, NationsBank had been watching the businesses go to other banks or finance companies, Mr. Moore said.

Small Business Credit will lend against receivables and inventory or, in some cases, against fixed assets.

The unit has received a steady flow of inquiries since it got rolling in February, Mr. Moore said. The Atlanta-based unit is focusing on manufacturers and distributors in the bank's core Southeast market, and hopes to rack up 10 deals within the first 10 months of operation. He said NationsBanc would accept referrals outside that region, but won't market it to other parts of the country until next year at the earliest.

Businesses that have approached the unit range from $5 million to $25 million in annual revenues, Mr. Moore said.

The unit is intended to complement the business lending activities of NationsBank's general bank, and receives referrals from it, Mr. Moore said.

"If a deal got to a certain amount of leverage or needed a certain amount of collateral monitoring, that's when they'd refer them to us," Mr. Moore said.

The unit also gets referrals from the NationsBanc Business Credit Group, which focuses on larger loans, up to more than $100 million, Mr. Moore said.

NationsBank also expects to the new subsidiary to better serve allows NationsBank to more effectively serve small businesses in all phases of development, Mr. Moore said.

"We wanted to put together a program that would keep a company in NationsBank for its lifetime," he said. "We ought to be able to handle any of their life-cycle needs."

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