The vice chairman of California's Union Bank shook up his audience at a recent conference by issuing this warning: "Don't think you have a lock on local small-business lending in your communities."

"You may scoff when an unsolicited letter comes to your customers offering $50,000 on a preapproved basis," added the executive, Richard C. Hartnack. "But then, your small-business borrowers start thinking, 'Am I not better off taking this automatic loan than having to go to my bank, present all my documents, and then wait for them to respond and possibly turn me down?'"

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