Nevada State Bank in Las Vegas is betting that if it gives small-business owners something for free, they will be so appreciative they will become customers.
Last month the $3.8 billion-asset bank launched an online "Small Business Resource Center," where it posts articles from experts in accounting, human resources, and other disciplines important to small-business owners, as well as tutorials in writing business plans and other materials.
For years banks have offered seminars and other free services in hopes of winning the business of entrepreneurs, but industry experts said the trend has accelerated of late as competition for those customers has increased.
"A lot of small businesses are started by bright people, but they don't have much experience, and so they just need education," said Bill Martin, the president and chief executive of Nevada State, a subsidiary of the $44 billion-asset Zions Bancorp. in Salt Lake City.
The Web site is free and does not mention any products or services the bank offers, but Mr. Martin said he hopes users will think about Nevada State Bank when they need loans, cash management services, or anything else it offers to business owners.
Large banks, small banks, nonbank lenders such as General Motors Acceptance Corp. and American Express Co., and even credit unions are eager to lend to business owners, and banks are fiercely fighting one another for the deposits. Larger banks especially are trying to catch the attention of business owners by rolling out free things like resource Web sites, walk-in centers, and e-mail newsletters.
Bankers say they also need to offer such services to hang on to their current customers. Many small businesses have come to expect some type of free advice from their banks in addition to the latest bank products - and bankers say that business would suffer if they did not offer such services.
Frank Sui, a principal in the New York office of Deloitte Consulting LLP, said that the stakes are high, because small businesses are estimated to provide $120 billion a year of revenue to financial services firms. Banks have to continually think of more innovative ways to capture their attention or risk losing to others with more provocative or useful services.
"The online resource center is the price of admission to small businesses," Mr. Sui said. "Some banks are now figuring out how they can add more value, by making their services much more interactive or linking them to products that could solve the problems" of small businesses.
Another Zions subsidiary, the $12.7 billion-asset Zions First National Bank, offers a small-business resource Web site, but it also operates a walk-in center in Salt Lake City. Cecilia Mitchell, the center's director, said it opened in January and offers such services as free use of computers (with accounting software) to business owners and prospective entrepreneurs.
Through these efforts, the bank not only wants to attract more small-business customers, but it also wants to ensure that even noncustomers stay afloat, she said.
"While Utah historically has been No. 1 in new business start-ups, the state has also been No. 1 in failures - and we'd like to stop that," Ms. Mitchell said.
Union Bank of California, a unit of the $49.4 billion-asset UnionBanCal Corp. in San Francisco, launched a resource Web site in November 2004. In addition to offering a quick reference library, the site also provides links to outside consultants who - for a fee - will help small businesses develop such materials as business plans or policy manuals.
Barbara Hoose, an executive vice president of small-business services for the bank, which is mostly owned by Mitsubishi UFJ Financial Group Inc., said she believes customers appreciate the convenience of having pre-screened consultants on one site.
In conjunction with its resource Web site, the $482 billion-asset Wells Fargo & Co. sends willing customers monthly e-mail newsletters containing "snippets" and links to articles posted on the site, says Mark Baumli, the senior vice president of business Internet services.
The site also has a cash-flow calculator, and if users determine that their cash flow is little or nonexistent, the calculator program suggests a line of credit.
"The suggestion is more subtle than a hard sell - it adds to the whole notion that we're trying to honestly fulfill their needs," Mr. Baumli said. "More than a few" customers have taken out lines of credit after using the calculator.
Bank of America's resource Web site has a calculator that prospective entrepreneurs can use to determine if they have enough money to start a business, says Peter Berbee, the senior vice president of small-business e-commerce at the $1.3 trillion-asset Bank of America Corp. in Charlotte.
A tutorial on the site helps small businesses determine how well they stack up against their competition, by analyzing factors such as prices and the number of employees. The tutorial then suggests how to write a strategic plan to better compete.
Some banking companies, such as Wells, have in-house editors to develop most of their sites' content, while others, including Nevada State, outsource to vendors. Nevada State uses a private-label site developed by Small Business Resources Inc. The Fairfield, Conn., company's CEO, Robert Boorin, says the service generally appeals to banks with assets of $2 billion and above, because they can afford it.
Smaller banks may not need such a site, as they tend to be much more intimately involved with the day-to-day affairs of small businesses, he said.
So true, said Lyle Frederickson, a senior vice president of Arizona Business Bank, a unit of the $1.93 billion-asset CoBiz Inc. in Denver. The bank does not have an online resource center, but its top officers sit on the boards of local chambers of commerce, small-business development centers, and Rotary and Lions clubs - and contact with local business owners often translates into business.
"A smaller bank can reach their market with feet more effectively than they can with a Web site," he said.
