How To Beat the Credit Crunch

Money markets are tight, especially for companies making $500,000 to $25 million a year. Your chances Improve greatly if you know where to look and how to make your case.

By Louis Moscatello

Fastframe U.S.A. Inc. gets its financing the old-fashioned way. John Scott, who started the picture-framing stores three years ago and has three other family members in the business and grew it to $14 million in sales, raised $500,000 by selling preferred stock to a private investor. Then the owners of the building in Agoura Hills, California, where Fastframe has its headquarters, made a $1 million investment in the company's common stock.

Preferred Pipe Products Corp., a family business in St. Louis, took another route. The producer of specialty pipeline components for the oil and gas industry had grown rapidly over the past three years to $20 million in sales. Now some of its notes were coming due. Preferred Pipe could not turn to its banks; it already had reached its limit there.

The company struck a deal with Waiter Heller, a finance company in Chicago, which injected $6 million in new common equity and subordinated debt into Preferred. the investment gives Heller, owned since 1984 by the Fuji Bank of Japan, a substantial position in the company and several seats on Preferred's board. Six years from now when the note is due, the family can buy out Heller.

While Fastframe's approach will never go out of style, Preferred Pipe's solution to its capital problems is new to an increasing number of family businesses. Deregulation has dimmed the distinction between banks and other financial institutions. Once reserved for complex megadeals involving billions of dollars, sophisticated financial instruments that blur the line between debt and equity are now available for middlemarket companies like Preferred whose revenues are measured in millions.

The bad news, however, is that lending institutions throughout the country are tightening their credit standards. This flight to quality by lenders can leave many small companies behind. Through most of 1990, according to Federal Reserve data, existing loans to corporations by the largest banks fell by a few percentage points, a significant turnaround from the gains registered in previous years.

Well-managed family businesses can still get capital, although they will have to work harder for it. "The credit crunch is not evenly spread throughout the country--there are still pockets of liquidity and good deals are still doable," says Mark DeNino, director of corporate finance at Philadelphia-based CMS Companies, an advisor to closely held businesses. "It means searching in every corner and exploring every alternative, including bringing in a minority equity investor for five to seven years."


For companies with sales below $5 million, commercial banks are often the only feasible source of Financing.

Senior debt, which has first claims on the assets of a company in event of liquidation,is generally secured (when it is at all) by inventory, plant, property, equipment, and accounts receivable. The cost and flexibility of debt is a function of whether it's short or long term, secured or unsecured. "Most family companies only look at interest rates when measuring costs to determine if they are getting the best deal, but there are other issues to consider," says John P. Waterman, senior vice president at Howard, Lawson & Co., an investment bank in Philadelphia. "Usually lower costs imply more strings and quicker repayment terms. A one percent higher rate may be worth the nexibility of a longer term and easier covenants. Especially since interest is tax-deductible."


Size of companies served: All sizes.

Cost of capital: Prime rate plus 0.5 percent to 3 percent, plus fees.

Primary advantages: Flexible, low-cost, ongoing business relationship, additional financial services available. Primary disadvantages: Close monitoring of your finances, possible restictions on your activities. How it works. For companies with sales below $5 million, commercial banks are often the only feasible source of financing. Owners of companies with sales below $10 million will probably have to pledge personal guarantees for their company's loans.

Many of the large money center banks and big regional banks are under pressure to upgrade their loan portfolios, in part by dealing more with Iarger companies. Small to mid-sized companies have a better likelihood today of getting bank financing from a smaller regional or local bank.

In the current economic environment, it is important that you do not depend on any one bank. It may be worthwhile to pay a fee to maintain a line of credit at a second bank, even if you do not use it.

Commercial banks seek a relationship with their clients. In regions where banks are aggressively seeking business with small companies, this can work to the company's advantage on loan costs."If a company banks with us, brings us their trust business, their deposit business, and their cash-management business, then we can price the entire relationship at a certain yield rather than putting it all in the loan cost" says Jack Whitt, manager of statewide banking activities at First City, Texas/Houston.

Banks' covenants on financial ratios are usually more restrictive than some other financing sources, but they are more flexible about changing them to meet changing conditions. "Banks see covenants as yellow lights or tripwires, so they will be informed of any changes immediately. It's part of the relationship they want with borrowers," says Waterman.

At a commercial bank you deal directly with the key decision maker in your case--your loan officer. This is usually considered an advantage for the borrower, but not always. Fastframe recently changed banks because it was unhappy with its loan officers. "I got sick of having a new account executive just out of college every three months," says John Scott, CEO of the company.

How to get it. Identify your financing requirements early and start the process of shopping well ahead of the time you need the money. Loan approval can take two weeks to two months today. Apply to a number of banks to be sure of finding one.

Don't ask for more money than you need. This is a mistake small businesses too often make and it immediately brands you as nonprofessional and triggers even closer scrutiny. "A borrower needs to make a loan request that would maintain a reasonable ratio of debt to equity consistent with the company's industry and cash now prospects, says Frank Mynard, president of Bank of Northern Illinois and chairman of the American Banking Association's Small Business Banking unit. Have in mind a range of how much you need, preferably in best case/worst case scenarios. Document both cases in your business plan.


Size of companies served: Below $3.5 million in sales in many cases.

Cost of capital:Varies but usually starts at prime plus 1 percent to prime plus 2 3/4 percent plus a 2 percent fee.

Primary advantages: Allows borderline companies to get bank financing with SBA guarantees; longer maturities; establishes relationship with commercial bank for small businesses with limited credit history.

Primary disadvantages: Requires personal guarantees.

How it works. Many family companies get their bank loans through the SBA's 7A program, which guarantees loans made by commercial banks and other lenders. The government defines "small" business as independently owned and operated retail and service companies with sales below $3.5 million, construction contractors with sales below $17 million, wholesalers with fewer than 100 employees and manufacturers with less than 500 employees.

Secured loans made under the program range from $50,000 to nearly $1 million with the SBA guaranteeing as much as 90 percent of the first $155,000 and 85 percent of the next $600,000.

Nearly 6,000 lending insti tutions participated in the program in 1989 and made 16,831 loans totaling $3,6 bil lion, for an average-size guaranteed loan of $218,000. The largest single SBA lender was not a bank, but a home finance company, The Money Store Invest ment Corp., which has 30 locations in 15 states, mostly on either coast.

"Our typical client is a small business that is three to four years old, has Sust moved into the black, and is looking to expand to larger quarters," says Larry Wodarski, executive vice-president at The Money Store.

Under SBA programs, lenders can charge the borrower a variable rate up to 23/4 percent above the prime rate, ad justed quarterly.Terms can be up to 10 years for working capital loans, up to 15 years for certain equipment, and up to 25 years for owner-occupied real estate. The borrower must pay a 2 percent fee to the SBA on the guaranteed portion of the loan, payable in certified funds at closing.

When an SBA loan is from a bank, it sets the stage for a relationship with the bank. "VVhen we make an SBAloan, we expect borrowers to have a relationship with the bank, and we expect to do more financing for that company within a year," says Pamela Davis, vice-president and director of SBA lending programs at the Reading, Pa. office of Philadel phia's Meridian Bank.

Lending institutions which generate a certain volume of SBA loans with a low delinquency rate become part of the SBA's Preferred Lender Program (PLP). These lenders are empowered to make the loan and SBA-guarantee decisions themselves, which means less paperwork for you and about the same wait as any standard bank loan. For this control, the banks sacrifice some of the guar antee "the SBA will insure only 80 percent of a PLP loan. Since banks have the most risk in this program, they usually put their most credit worthy clients in it.

How to get it. To apply for an SBA loan, prepare a current balance sheet. Do not include personal assets or lia bilities. Have available a business profit and loss statement for the previous three years and for the latest period end- ing within the past 90 days. Include copies of Federal income tax returns for the past three years. Prepare a cur rent personal financial statement of all owners holding more than 20 percent of the equity. List all collateral to be offered as security; break it down by category such as real estate, machinery, fixtures, and inventory; estimate the market value of each item. State the amount of your loan request and the exact purposes for which it will be used by item and dollar amount.


Size of companies served: All sizes.

Cost of capital: 14 to 25 percent.

Primary advantages: Fi nances up to 100 percent of the cost of the leased equip ment and allows concentra tion of working capital; keeps o'lher credit sources open; upgrade clauses protect against equipment obso lescense; simplifies book keeping.

Primary disadvantage: Each lease requires careful scrutiny. How it works. Sometimes small, local leasing compa nies are the only financing source for family businesses seeking cars or office equip ment. "It's more costly than the big secured lenders, but for a small company it may be the best and only way to get equipment for the company to grow," says Waterman, who estimates the interest rate charged by most small leasing com panies is close to 18 percent.

The two most common types ofleases are capital or finance leases and oper ating leases. With the capital lease, the payment stream covers the full value of the equipment plus finance costs. It can include a balloon payment covering the residual value of the equipment at the end of the lease period. At the end of the lease, the lessee owns the equipment. These leases finance the purchase of equipment and are treated as purchases for tax and accounting purposes. The in terest rate is built into the terms of the lease, but it's usually competitive with commercial banks.

An operating lease allows a company to rent equipment on a short-term basis with no ownership obligation. Payments are treated as a tax-deductible expense. The lessor retains the right to deduct depreciation for tax purposes.

The best deals come from vendor leas ing companies, which are eager to place their equipment. They can offer operat ing leases or finance leases. If you turn instead to secured lenders rather than to vendors, you will likely have to cover some of the cost of the equipment up front, The interest rate built into the lease for the other 80 percent of the cost will probably be a few percentage points higher than a vendor lease.

How to get it. You'll need financial statements for the past two years. It's also important to have a suitable bank or trade credit reference. Leasing com- panies do not like to be your first and only creditor.

Bear in mind that leasing is an un regulated business. In selecting a lessor, check with your lawyer, accountant, and business contacts about reputable ones in your area. Every lease is a contract, but there is no standard contract in the leasing industry. So be certain to check all documentation carefully before mak- ing a commitment.


Size of companies served: $5 million in sales and up.

Cost of capital: Prime rate plus 1.5 to 6 percent, plus required fees for audits, appraisals, and closing. Primary advantages: Owner can forego need for personal guarantee. Al lows otherwise marginal companies to get credit.

Primary disadvantages: Higher cost than standard bank commercial loans. Lenders impose direct controls on use of assets and the cash flows generated by them.

How it works. What are the financing alternatives for family businesses whose cash flow prospects are too spotty for bank financing, or who are up against some hard times but still pos sess a solid asset base and reasonable long-term prospects?

"Asset-based financing is particularly relevant for rapidly ex panding businesses whose accounts receivable outstrip available cash-flow and working capital," says DanielJacobson, management consulting man ager in Grant Thornton's Chicago office.

The Commercial Finance As sociation estimates that its 230 members do 80 percent of the asset-based lending in the country. Its membership roster includes 88 finance companies that make loans from below $250,000 up to $1 million. But the high fees in volved with asset-based lending make loans below $1 million very expensive. Many commercial banks are also offeringasset-basedlending.

Unless the borrower is very healthy, lenders generally impose a cash/collateral arrangement where by they get repaid directly from the revenue stream produced by the collateral, leaving you only the cash you need.

If your family business is seeking an asset-based loan that is too small for a bank's secured lending deparment, you may need the services of a syndicator. They are expensive and may involve personal guarantees. Interest costs, plus fees, can go as high as 20 percent of the principal.

"Our clients are not GM or IBM. Typ ically, they were rejected by their bank. They might have two or three years of operatinglosses,oramajortaxproblem with the IRS, but they have a strong collateral base,"says Hewitt Heiserman Jr. of Brice Capital Corp. in King of Prussia, Pa.

Brice specializes in raising capital from as low as $100,000 up to $10 million. It does not put its own capital at risk, but syndicates the loan among numerous financial institutions or individuals who may have expertise in the borrower's industry. The loans usually carry a rate of prime plus 2 to 4 percent.

How to get it, Check with your accountant, investment banker, and other local contacts to find out the names of reputable asset-based lenders serving your particular region.

You will need to know how your lender will value the assets used in your business. Since it is the basis for the amount ofyourloan,youwanttomakesurethe appraisal for your collateral is the high est, or at least the fairest, price. Appraisals of equipment can vary signifi cantly. There are no really good, universally accepted standards. Fair market value is usually the best price for any asset. Orderly liquidation value means priced to sell in a reasonable pe riod, usually 180 days. Auction value Is the price equipment would fetch if put on the block for one day--it's usually very low. In-place value is a price that reflects the equipment as is and as used. It can also be low.

Asset-based lenders are usually very conservative. Expect them to use or derly liquidation value or less when con sidering a loan. As for collateral, these lenders prefer assets that are easily liquid such as accounts receivable or a fin ished goods inventory. In some industries, factoring companies regularly serve as simple asset-based lenders. They may pay the borrower 85 percent on his receivables and then assume all the risk of collection.


Techniques used to fund leveraged buyouts of large public corporations ore increasingly avoilable to SmaIIer companies.

Subordinated debt, or mezzanine financing, is a form of quasi-equity. Unlike senior debt, it is typically unsecured. Repayment can take many forms, from regular periodic payment of principal and interest to a balloon payment at the end of its term. As used in financial markets today, suber dinated debt almost always carries an equity kicker that gives the investors the bulk of their return at the end of the term, usually in five to seven years. Used extensively to fund leveraged buy outs of large public companies, suberdinated debt has been increasingly available for smaller companies.

If your company is at the point where some sale of equity is either preferable or necessary as a way to raise capital or restructure, subordinated debt may make sense. Equity or equity equivalents are often a part of their deals. So family companies will have to grapple with all the complex tradeoffs between family issues of control and liquidity when going beyond simple debt financing.


Size of companies served: Minimum sales of $20 million, net worth of at least $10 million.

Cost of capital: Negotiable, but usually varies between 20 and 30 percent. Pnmary advantage: Large chunks of capital available at one time; flexible terms; relatively inexpensive source of capital compared to straight equity. Pnmary disadvantage: Often mvolves some loss of control to investor. How it works. Noel Urben, president of the BT Capital Corp., the venture capital subsidiary of Bankers Trust, cites the family and nonfamily shareholders of one company who wanted to raise some cash.BT bought 49 percent of the company. It also provided funds through a "hybrid" zero coupon note for eight years at 12 percent. Terms called for no interest to be paid the first three years. But the company was al lowed to deduct the imputed interest for tax purposes, thus reducing its taxes and increasing its cash flow. After eight years, the bank can be bought out at a premium that raises its return well above the 12 percent interest.

The rush to do subordinated financing has slowed as a more sober outlook has taken hold in financial markets. But money center banks are still willing to put their own funds to work. Many local and regional banks are entering this new market. Pension funds, investment banks, finance companies, and foreign banks continue to straddle the fuzzy frontier between debt and equity.

Financing can take many combinations, including common stock, pre- fewed stock, and various debt instruments convertible into equity at some point. It's worth noting that, In many instances, the lender never actually owns equity in the company but simply owns the right to buy equity.

The lenders are typically looking to earn an annual return of 20 to 30 percent on their investment. They want to be out of the deal in about five to seven years, usually through an exit strategy that's been negotiated as part of the package. The return often includes some current yield to the investor, usually through preferred stock dividends or interest payments of between 12 and 15 percent on a debt instrument, if used. The bulk of the return comes at the end of the investment's life, when the exit strategy can call for the lender to "put" its equity rights back to the company, or even for the company to be sold, or go public.

How to get it. Shopping for this capital infusion requires the same preliminary steps as ap proaching a bank for a loan. It may also require the services of an investment banker who knows the marketplace for the type deal you need. For most business owners, this is a once-or-twice-in-a-lifetime step involving a great deal of money. Hiring an expert to help you prepare yourself, market the company, and negotiate the deal can make a lotofsense.


Size of company served: Minimum sales usually of $20 million, net worth of at least $~O million.

Cost of capital: Usually between 30 and 35 percent, plus fees. Primary advantage: Large amounts of capital available at one time; flexible terms; relatively inexpensive source of capital compared to straight equity.

Primary disadvantage: Often involves some loss of control.

How it works. The greatest competition for the merchant bankers comes from the many funds that provide private placements to middle market companies, which these funds typically define as companies whose total market value is $1O million to $15 million.

These funds are generally seeking a 30-to-35 percent return compounded over a five-to-seven year period, derived from a combination of interest paid on the debt portion or dividends on preferred stock, and redemption of equity kickers at the end of the period.

How to get it: There are many ways for a family business to find LBO funds, which make these type of investments. There are numerous lists. One excellent source is The Corporate Finance Source Book, a $377 directory published by National Register Publishing, that lists specifics on 3,000 venture capital sources, advisors, and other information.

Many funds specialize in a particular industry, and often provide management expertise to the companies they invest in. Ask your lawyer and accountant for leads. But it still usually pays to get an agent familiar with this market to help you locate the best source for you and make the best deal.

There's also a publicly traded $83 million fund that provides senior and subordinated debt financing to small, privately-held business. Allied Capital Corp. II was created in 1989 and trades over the counter."We have many family businesses as clients," says David Gladstone, president of the fund. The size of Allied's clients vary friom a corner store with $500,000 in revenues to large manufacturing companies.

The fund provides the loan portion at its standard rates, plus the borrower gives up rights to an equity stake of between 5 and 20 percent. The equity right gives the fund an exit window from the deal, usually after five years. "In 30 years, we've never exercised an equity right," says Gladstone. Instead, Allied usually "puts" the rights back to the company, usually on terms that call for payment over a two-to-five year period.


The most flexible method of financing raises difticult issuesoboutsharing thefamily'scontrol of the company with outsiders.

Common equity capital is the most flexible method of financing. It may not require repayment, nor must it pay a dividend. But this aexibility can carry a high cost, in terms of sharing control.

"When you take in a new partner through an equity investment, it's like a marriage. It's crucial you ask,'What sort of partner are they?' " says Francois de Visscher, of de Visscher & Co. in Stamford, Connecticut, an investment banking advisor to family businesses.

Equity investors can be individuals or business associates, institutions, or your employees. A company can also sell shares to the public, although in today's markets it takes a large, well-established company to do so successfully. Initial public offerings are not considered below.


Size of companies served: All companies

Cost of capital: Varies but investors generally seek eventual returns of 30 percent or more on equity investments.

Primary advantage: Highly flexible; repayment often not necessary; dividends at management's discretion.

Primary disadvantages: High cost if redeemable; sharing of control.

How it works. Individuals often are the best source of equity funds. Some are willing to take straight minority positions with no exit strategy, as professional money managers insist upon. As John Scott learned when his landlords, a construction company, decided to invest $1 million as a minority partner in Fastframe, new investors can offer a lot more than just capital--their wealth of experience, for instance, and their contacts.

How to get it. There are lots of"angels," but they are difficult to find. No formal market exists. Talk with your lawyers, accountants, members at your club, or any network you think can connect you to a source.

Expect private investors to act just the opposite of the faddish stock market. They are usually more interested in your company's fundamentals rather than whether or not you're "hot." You can place unregistered stock with up to 30 sophisticated investors without running afoul of the SEC.


Size companies served: Fair market value of at least $.5 million; at least 40 employees.

Cost of capital: Similar to bank rates fortermloans.

Primary advantage: Tax-advantaged funds source; helps perpetuate business; aids in estate planning; provides employeeincentive.

Primary disadvantage: Reduces fam- ily equity.

How it works. Selling equity to your employees through an employee stock ownership plan (ESOP) is another excellent way to raise equity capital. An ESOP is an employee-benefit plan designed to purchase stock from a company or its share~olders.

ESOPs are not for every family business. They generally work best when family owners are willing to bring employees into the decision-making process, treating them as the part-owners that they are. If a company is in good financial condition, an ESOP can be an excellent way for owners to withdraw some of their capital from the business in a tax-advantaged manner, either to gain liquidity or as part of overall estate planning. "But ESOPs are also a device to put capital into the business," says Dick Burton, chairman of Private Cap ital, Inc., a San Francisco investment bank that specializes in designing and implementing ESOPs.

The ESOP purchases stock directly from the company or its shareholders. To do so, the ESOP often borrows the money, from a bank or other lender, including the company itself. When the ESOP borrows money, the company usually guarantees the loan. The company also commits itself to making tax- deductible annual payments to the ESOP that are sufficient to meet the ESOP's obligations to the lender.

To justify the costs of installing and maintaining an ESOP, a company should have a minimum fair market value of $1.5 million and a payroll of about $500,000 annually, estimates Buxton. "But they are really best for companies that have a minimum of 40 to 50 employees and are looking to perpetuate the business through and beyond a transfer from one generation to the next," says Burton.

How to get it. ESOPs are complicated and cost $20,000 or more to set up. But ifyou decide to take the step, financing is not difficult to arrange for a solidly profitable and growing company.

Your own bank is the best place to go for financing an ESOP. Some of the nations largest commercial banks, such as Chase Manhattan, Chemical Bank, and Bank of America, have set up divisions dedicated to providing funds for ESO Ps.

The ESOP Association of America, in Washington, D.C., can direct you to an affiliated public agency in your own state or a local expert who can help you organize an ESOP in your company (telephone 202-293-2971).

Taking the pulse of your bank

Just as a bank will examine your company's credit worthiness, you should pay strict attention to your bank's financial health, too. If the bank is a publicly traded company, much information is readily available from its annual report. Check with brokerage houses for analysts who follow the company.


The Corporate Finance Source Board. a $377 directory published by National Register Publishing, that lists specifics on 3,000 venture capital sources, advisors, and other information. Address: 3004 Glenview Rd., Wilmette, III. 60091. Telephone: 800- 3236772.

Small Business Administration. contact your local SBA office.

The National Cooperalive Bank. P.O. Box 96812, 1630 Connecticut Avenue, N.W., Washington, D.C. 200906812. Telephone: 800-955-9522.

National Commercial Finance Association. Roster of Members by loan type, size, and marketing region, 225 West 34 St., Suite 1815, New York, N.Y. 10122. Telephone:2125965053.

Pratt's Guide to Venture Capital Sources. $145 plus $5 shipping and handling. Write: Venture Economics, 75 Second Ave., Suite 700, Needham, Mass. 02194. Telephone: 617-449-2100.

How the ESOP Really Works. $13. Contact ESOP Associotion, 1100 17th St., N.W., Suite 1207, Wash- ington, D.C. 20036.

Managing an Employee Ownership Company. $25 ($15 for members). Contact The National Center for Employee Ownership, 2201 Broadway, Suite 807, Oakland, Calif. 94612. Telephone: 415-272-9461.

Steps to Small Business Financing jointly published by the American Bankers Association and the National Federation of Independent Business, Capital Gallery East, Suite 700, 600 Maryland Ave., S.W., Washington, D.C. 20024.Telephone: 202-554-9000. Also inquire about the publication at your local bank.

Special consideratons for family businesses

The family business angle can be an important part of your "story" when talking to investors or loan officers. "The most salient characteristic in making loans to small companies is that you deal with people, not the company," says Paul Browner, senior vice-president in charge of the business banking division at Huntington National Bank dealing with companies with less that $10 million in sales. "When looking at a credit request, we're really making a judgment on the character and competence of the people and their commitment to the business. It's not until a company gets to $30 million in sales that we begin to look at the company, its strategic position, and other measures."

Having dedicated, experienced management that grew up in the business can work to your advantage when seeking capital. But you must demonstrate that the company is run as a business on an arm's length basis and not out of the family's pocket. Whenever transactions exist that are overly favorable to the family, such as a nonworking family member on the payroll, this should be disclosed and appropriate adjustments shown on the company's financial statements.Whether or not succession is an issue that a family business must address when seeking odditional capital depends on the nature of the business, the age of the key family members, and the type of capital sought. Seldom is a written succession plan a requirement for getting financing, but having one puts potential creditors greatly at ease.

If the business is highly dependent on the founder or head of: the family for technology, sales, or management, succession becomes an issue for discussion. If: the key individual is over 55, lenders will want some indication that the business has considered the possibility of succession.

The type of financing has an impact. "It's different for a revolving line of credit for a company where the father is 64 years old and the son is 30. It's not much of an issue then," says Brawner. "But if they're seeking a 20- year loan to buy a factory, then it's an issue. "

CID Draperies Inc., Gaithersburg, Md.

Product: Custom draperies.

Sales: $200,000.

Capital Needs: Obtained a $175,000 SBA- guaranteed loan through Allied Mortgage Co., the real estate financing arm of Allied Capital Corp. The loan enobled her to purchase a building to house her company.

Fastfframe, U.S.A. Agoura Hills, Ca.

Product: Retail picture frames.

Sales: $14 million.

Copital needs: Raised $500,000 from the sale of preferred stock to a private investor and $1 million from the sale of common stock to the owners of the building where the company maintains its headquarters. The money was used for expansion.

Gravely Roofing Corp., Philadelphia, Pa.

Product: Roofingng contractor.

Sales: Less than $10 million.

Capital needs: Switched his lending business to United Valley Bank of Philadelphia, Pa. After receivlng a credit line of $800,000, Gravely brought ail his banking business--including mortgages and a real estate limited partnership-under United Valley's roof.

Preferred Pipe Products, St. Louis, Mo.

Product: Specialty pipeline fixtures

Sales: $20 million

Capital needs: Sold $6 million in common stock and junior subodinated debt to Heller Equity Capital Corp., a division of Heller Financial Inc., owned by Fuji Bank of Japan. Heller got a substansial position in the company and several seats on the board.

Jackson Hardware,San Rafael, Ca.

Product: Hardware, home improvement items.

Sales: $13 million.

Capital needs: Set up an employee stock ownership plan [ESOP) for the company's 74 employees. As the ESOP expands its equity interest in the years ahead, Jatcksan figures his outside borrowing will be drastically cut.


American State Bank Pierre, SD 605-224-9233
Associated Commerce Bank Brookfield, Wl 414-271-1786
BancOhio National Book Columbus OH 614-463-7099
The Bonk of Califomia N.A. Son Francisco, CA 415-765-0400
Bank of Hawaii Honolulu, IN 808-537-8111
Bank of Newport Newport Beach, CA 714-760-6000
Bank of Vermont Burlington, VT 802-658-1810
Bank One/Dallas Dallas, TX 214-290-2000
Barnett Bank of Jacksonville N.A. Jacksonville FL 904-791-7500
Bay Bank of Commerce San Leandro, CA 415-357-2265
California Business Bank N.A. San Jose, CA 408-290-8866
Casco Northern Bank N.A. Portland, ME 207-776-7018
Chose Manhattan Bank N.A. New York, NY 212-580-2558
Civic Bank of Commerce Oakland, CA 415-836-6500
Cole Taylor Bank Wheeling, IL 312-775-7171
First National Bank of Omaha Omaha, NE 402-341-0500
First Tennessee Bank N.A. Memphis, TN 901-523-4444
The Huntington National Bank Morgantown, WV 304-291-7700
INB National Bank Columbus, ON 614-476-8300
Kelly Field National Bank San Antonio, TX 512-681-5100
Lake Shore National Bank Chicago, IL 312-915-5779
Maryland National Bank Baltimore, MD 301-244-5000
Michigan National Bank Grand Rapids, MI 616-451-7872
National City Bank Cleveland, ON 216-575-2000
Ohio Citizens Bank Toledo,OH 419-259-6683
Pittsburgh National Bank Pittsburgh, PA 412-762-2000
Seattle First National Bank Seattle, WA 206-358-7800
Signet Bank/Virginia Richmond, VA 804-747-2000
Southtrust Bank of Alabama Birmingham, AL 205-254-500O


Advance Financial Corp. Atlanta, GA 404-256-2123
Alcor Business Capital Los Angeles, CA 213-937-0535
Boston financial & Equity Corp. Boston, MA 617-267-2900
Branch Banking & Trust Co. Wilson, NC 919-3994111
Capital Factors Inc. Ft. Lauderdale, FL 305-730-2900
Celtic Capital Corp. Santa Monica, CA 213-314-7333
Citizens Trust Co. Riverside, RI 401-546-7000
Concord Growth Corp. Palo Alto, CA 415-493-0921
Dam Business Credit Cleveland, OH 216-243-7778
Deutsche Credit Corp. Deerfield, IL 708-948-7272
Diversified Business Credit Inc. Minneapolis, MN 612-339-8958
Enterprise Financial Corp. Atlanta, GA 404-255-4400
Fidelcor Business Credit Corp. New York, NY 212-333-7445
Finance Company of America Baltimore, MD 301-752-8450
First Capital Corp. Oklahoma City, OK 405-755-5260
Independent Equipment Co. Son Francisco, CA 415-981-0308
KBK Financial Inc. Houston, TX 713-2244791
Lighthouse Financial Corp. Greensboro, NC 919-272-9761
Midlantic Commercial Co. Bloomfield, NJ 201-893-3700
Orange Commercial Credit Anaheim, CA 714-937-1181
Phillips Factors Corp. High Point, NC 919-889-3355
Presidential financial Corp. Atlanta, GA 404-491-8345
Prestige Capital Corp. Fort Lee, NJ 201-9444455
Puritan Finance Corp. Chicago, IL 312-372-8833
RAI Group Hackensack, NJ 201-489-6400
Republic Acceptance Corp. Minneapolis, MN 612-333-3121
Riviera Finance Redondo Beach, CA 213-540-3993
Rosenthal & Rosenthal Inc. New York, NY 212-244-1200
Winfield Capital Corp. Great Neck, NY 516-487-0320