Check the web site of any bank these days, click on Small Business, and you'll find a range of services that you may not have realized are part of a bank's offerings. Banks have been providing some of these services to businesses for decades. Others, particularly those driven by technology, are new. Here's a run through of some of those services, from availability of capital to management services. These services are all packaged to help small- to medium-sized business succeed.

It takes money to make money is cliché but true. All businesses need access to capital to run their operations. That is certainly true for small to medium-sized companies. Where's the capital to come from "” particularly for a starting business with little or no collateral? Fortunately, we are in a period that favors a growing business's access to capital.


The weak demand for capital during recent recessionary times has resulted in some intensive price competition for new loans, says Toby R. Rau, senior vice president/middle market lending, U.S. Bank.

"This applies to all sizes of businesses, and probably (has) impacted the small businesses more positively than during previous credit cycles. Over the past 10 years, many new or expanded sources of capital have become available for small- to medium-sized businesses," says Rau.
For example, U.S. Bank has capital purchase money security lending programs, available through leasing companies, that provide capital for technical costs.

The availability of capital can result in better deals, says Mark Caesar, First Vice President, Commercial Banking Manager, First Financial Bank, but borrowers should be cautious. "The banking environment is extremely competitive within itself, but when you add in Private Equity providers, Angel Capital Providers, Capital Markets Sources, Securitization Providers and loan brokers, a company or borrower can probably find capital for any type of deal," Caesar says. "Borrowers need to maintain discipline or they can quickly get into trouble with poorly structured credit facilities that were provided on the basis of being competitive and trying to be unique."

U.S. Bank's Small Ticket Leasing group provides up to 100 percent lease financing up to $250,000, says Rau.

Rick Rokosz, senior vice president and area manager for business banking, National City Bank, says there is a move toward unsecured line of credit financing for working capital for small business owners. "As we become more sophisticated with our credit scoring models, they are become better predictors for performance. This allows banks to provide more excessive capital to credit-worthy small business owners because of their personal credit history," he says.  But that's not the case for the medium-sized business.

There, things are still done in the traditional manner: the bank analyzes a company's ability to manage risk, says Cary Sierz, senior vice president and manager for middle market lending, National City. "The newest thing is how we are trying to streamline the process and make it easier it for the company, tying a lending product together with checking accounts, for example."

Douglas Cleaves, senior vice president and manger of commercial banking, PNC Bank, says one relatively new service is placing loans for large real estate transactions with in-house conduits such as insurance or mutual funds companies. The process can offer customers more variety in the lengths and rates of their loans.

The current inverted yield curve also gives an advantage to a company seeking capital. "(An inverted yield curve) generally happens when the feds and the bond market don't agree on the direction interest rates are taking," says Sierz. "You don't have this phenomenon happen often, but when you do, we tell our customers it's a window of opportunity to lock in (lower long term) interest rates for financing equipment or real estate."

New markets tax credits are another capital source recently created by the federal government whereby an investor gets tax benefits as part of its yield on investments in low-moderate income census track projects.

Oak Hill Banks, which has 38 banking offices throughout central and southern Ohio, has a community development corporation which is eligible for new market tax credits in 11 counties in Ohio classified as Appalachian. It provides financing for those businesses at competitive rates and terms.

Cash flow has been enhanced by technological innovations that allow companies to deposit checks remotely through image technology. For years, larger corporations have used automated equipment to make electronic deposits. Banks are now offering this service to smaller businesses, thanks to the cost effectiveness of advanced technology.

That makes money available more quickly, says John Guy, senior vice president/business banking, Fifth Third Bank. National City, PNC and U.S Bank have similar products.

More creative financing can be also found in partnership with the Small Business Administration (SBA). "Expanded offerings through the SBA loan programs, which are provided through lending institutions like U.S. Bank, provide small businesses access to significant capital at cost effective rates for transactions up to $10 million today," says Rau, U.S. Bank.

The SBA also allows banks to offer loans to a wider range of businesses, many of which are shut out from conventional loans because of the lack of collateral.

"SBA loan guarantees mitigate the risks inherent with small business lending," says Miles R. Armentrout, executive vice president and chief lending officer, Oak Hill Banks

Securing capital is one matter. Managing it well is another. Here banks are also offering smaller businesses services like the treasury management systems that large corporations have had for years. Responding to market needs analysis, banks saw an opportunity for customer service that wasn't being met. Large corporations have the staff and operations to manage their payroll, their receivables and payables, and their vendor relations. In recent years, banks have begun to provide these services to smaller businesses so they may make better use of their money. Many of these products are simply better cash management practices, such as directing funds in checking accounts to interest-earning money markets.

One challenge faced by small businesses is access to ready cash. At times, a small business will sell its account receivables at a deep discount, called factoring, to increase its cash flow. Oak Hill has a cash management product called the Business Manager that addresses this cash flow issue. "The Business Manager functions as a hybrid account receivables program," says Armentrout. "It looks and functions both like factoring and a line of credit, but it's neither."

For a fee, Oak Hill will purchase a small business's qualified current account receivables on an ongoing basis at face value. The product provides immediate access to working capital to help a small business grow.

Thanks to online banking, business owners can access their accounts, manage their finances 24/7. Cleaves says that small businesses should continue to allow technology to streamline their internal administrative options and increase security. National City encourages the use of technology by rewarding customers points for using online services. The points can be redeemed for gift certificates, airline tickets and cash. "Small business owners should continue to look for technology to be the driver," says Cleaves. "One of the things we've been talking a lot to our clients about is safety and security because we have seen an increase in fraud," he says.

As a standard, banks offer controls to reduce those risks. But online services are not limited to transactions.  Rau said online workshops and training were becoming common in many businesses sectors to provide easily accessible information to customers in a constantly changing business environment.

Caesar, First Financial Bank, said that the services that help smaller businesses operate more efficiently are the most popular services the bank has to offer. "Our smaller business clients have benefitted from online banking services that provide instant and constant access to daily account information and our courier service that frees up significant time previously spent going to the bank."


All major Cincinnati banks have a cadre of seasoned professionals on staff whose expertise is a valuable resource for companies. "U.S. Bank is able to offer investors access to the top money managers across the country in all asset categories," says Rau. U.S. Bank recently added seasoned legal professional Scott Mahon to provide professional ownership transition planning services that work in conjunction with the clients' existing service providers (CPAs, attorneys). "Scott acts as the quarterback of the process so our clients can focus on running their businesses."

Cleaves said that PNC's approach to banking is as an advisor or a consultant to businesses, helping them understand how mony comes in and out of their business. "We don't have a product-of-the-day approach and I think that's a unique approach," he says.
PNC, as with some other banks, also tailors its services to the needs of specific industries. Fifth Third segments its services by emerging markets, such as women, seniors, and minorities "Fifth Third has 250 bankers that are focused on the sales side alone," says Guy. "These are dedicated support people that focus on the business customer. We have bankers with different levels off experience, different competencies. We match those up to the needs of our customers."

Guy explains how often with smaller businesses, you cannot distinguish between an owner's personal property and the business' assets. This becomes clearer the larger the company becomes. As a business grows and takes on more employees, a different set of advisers is needed for items such as payroll, processing accounts, and vendor relationship. "What we try to do is come up with strategies and a set of resources that support the business within its evolution," says Guy.

Employee benefits packages are another standard service that larger banks provide its business customers. Fifth Third enhances a business's ability to service employees through products such as IRAs, insurance and profit sharing. "In the past, only the major corporations could do that," he says.

National City is finding that among the employee benefits most in demand by its customers are the newer health savings accounts.
Customized credit cards are another standard service. PNC's "purchasing cards" have limits as high as $5 million or $10 million, and the employer can decide how much and where certain employees can use the credit. "As technology gets better and better the capabilities have grown," says Cleaves of the credit cards—on both the payable and the receivable ends. "More companies are accepting vendor payments in the form of a credit card more companies are starting to use them."

Specialized cards are also helpful for accounting. If a business has a credit card limited to office supply use only, the invoice will provide a convenient record. Depending on how much the customers use their purchasing cards, they may also be able to get cash back through a rebate system, says Cleaves.

Guy sees a growing market in servicing the business sector. "It is an exciting era for us," he says. For the small- to medium-sized business looking for financial support across the spectrum, it is an exciting era for them as well.