For Barb Painter, a visit to her bank branch on April 15, 1995, was the last straw.
Ms. Painter, owner of a small 12-year-old map-making business in Minneapolis, said only one teller window was open on tax day, and a long line snaked through the First Bank branch.
Tired of waiting, Ms. Painter said she "created a scene" to attract the managers' attention. She then vowed to terminate Painter Prints' six- year relationship with the unit of Minneapolis-based First Bank System Inc.
"Small-business people are in a hurry," said Ms. Painter. "If I worked like that, I wouldn't be in business."
Poor service is by far the leading reason given by small companies for changing banks, according to a survey conducted for American Banker by Payment Systems Inc., a Tampa-based research firm.
Cited by 32% of small businesses that had changed banks within a year, poor service was well ahead of limited product lines (10%), inconvenient locations (9%), and lack of credit (7%).
For Ms. Painter, who also complained about her inability to get a loan, there was a happy ending. After looking at four other banks in the Twin Cities, she settled on Norwest Corp. She said the bank offers convenience, reasonable fees, and, critical to the small-business owner, credit.
First Bank wouldn't comment on the Painter Prints account, but Larry Crawford, an executive vice president, said the bank is opening three demand deposit business accounts for every one that's closed.
With the switch, Ms. Painter joined the majority of small-business owners who are pleased with their level of banking service.
Nearly three-quarters of the 875 small businesses in the survey - they had annual sales between $500,000 and $10 million - said they have a reliable contact at their primary bank that helps meet their credit and noncredit needs. Two-thirds said their bank values their business highly. Just 2% said they plan to change providers.
As bigger banks have targeted small businesses as a growth area, service quality has become increasingly important. Small-business lending grew 5% to $282 billion in the 12 months through June 1995, according to the latest data available from the Federal Reserve Bank of Cleveland.
Minneapolis-based Norwest is among the large banks aggressively seeking a bigger share of the small-business market. Two years ago, Norwest Bank Minnesota established a division for companies like Painter Prints that have annual revenues of up to $1 million.
Norwest Corp. already ranks fourth among U.S. banks in small- business loans. And the portion of its total portfolio represented by small-business credits - 46% - is also among the highest in the industry.
Michael McHugh, senior vice president, said focus group research identified three key needs that businesses in the category want met: convenience, access to credit, and dealing with the same banker.
"There are many businesses that start out small and stay small," said Mr. McHugh. "They are the ones we want to do business with."
The Twin Cities are home to 70,000 such small businesses, and Norwest wants to increase its market share by 3% a year, said Mr. McHugh.
Norwest will face competition from community banks that have long served that market segment. But Mr. McHugh said Norwest offers some benefits.
"No independent is going to operate a 24-hour, seven-day-a-week phone bank," he said.
Another advantage, he said, is Norwest's decentralized structure, which gives local bankers the final say on lending decisions.
"That's more expensive, by the way, and it's a riskier distribution system," said Mr. McHugh. "But we think it's customer focused."
In the first six months of this year, the Minneapolis bank established 3,000 relationships with small businesses, he said.
Other bankers say that the variety of small businesses leads to demand for a wide range of services, from receiving a quick answer on loan applications to having a nearby branch at which to drop off daily deposits.
To deepen its contact with small businesses, Comerica Inc. in Detroit has for a decade offered free seminars for company chief executives. Classes are held throughout the year and cover such topics as accounting, marketing, technology, succession planning, and international business.
"That's how (small businesses) are defining quality service to us: Be there with the capital that we need and be there to provide consultation and counseling to us," said Elaine McMahon, a Comerica senior vice president who manages small-business banking in southeastern Michigan.
Mr. Crawford of First Bank said customers are also demanding the convenience offered by technology, including automated teller machines, PC banking, and telephone service.
The importance of service quality to small businesses is underscored by another survey finding: Companies were more likely to switch banks because of lousy service than high prices. Just 7% cited high fees as a reason they moved, behind impersonal service and inconvenient branch locations.
"Many of the customers are not at all (price) sensitive," said Paul E. Martin, senior vice president at Marine Midland Bank in Buffalo. "Our people know them by name, they know their family history, they know their business history, they really feel at home there. You can't buy that with a few points off the rate."
The importance of good service is not lost on Barb Painter. A minor account problem left her two salespeople with bounced paychecks on Christmas Eve. In a panic, Ms. Painter called her Norwest branch.
"The woman said, 'I'll hold the bank open. Get your people down here and we'll take care of them,' " Ms. Painter recalled. "She went above and beyond the call of duty."