WASHINGTON - A new Federal Reserve study has found that as small businesses grow they rely more on commercial banks and less on thrifts or credit unions.

"As firm size increased, the use of commercial banks increased, and the use of savings institutions and credit unions decreased," Fed economists Rebel A. Cole and John D. Wolken wrote in July's Federal Reserve Bulletin.

The authors also discovered that proprietorships - the smallest of small businesses - are twice as likely to turn to credit unions as to other financial institutions.

Finally, the study found that companies in the Northeast use savings banks twice as often as the national average.

"This ought to be of great interest to bankers," Mr. Cole said in an interview. "Many of their traditional customers have been lured away. Th(ese) data will give them an idea what their target audience looks like and what services they are using."

Overall, small businesses overwhelmingly rely on depository institutions for financial services. The Fed researchers found that 96% of firms with fewer than 500 employees used banks, thrifts, or credit unions in 1993.

Checking accounts were the most popular service, with 95% of the 5,300 businesses surveyed using them. Savings accounts, including certificates of deposit, were far less popular - only 15% of small businesses saved through depository institutions.

About half the small businesses also turned to banks for credit lines, loans, and capital leases. The authors found that the larger the firm, the more likely it was to use credit.

These companies were less likely to use financial management services, with only one-third saying they used transaction, brokerage, cash management, or trust services.

As with credit use, the larger a business, the more likely it was to use a financial management service. More than three-quarters of companies with more than 100 employees used such a service, compared with 24% of those with two or fewer workers.

Credit cards also rated as an important product. Four in 10 companies used personal credit cards for work, and three in 10 used corporate cards. The authors found that the smallest companies asked employees to use their own credit cards and the largest, corporate cards.

The Fed also learned that the larger the company, the more likely it was to borrow from its owners.

The researchers based their study on data from the 1993 National Survey of Small Business Finances, which contacted 5,300 firms in late 1994 or early 1995 to ask about their use of financial services during 1993.

The Fed, which is still refining the survey results, plans to make all the data available to the public next year.

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