NationsBank sets up division to make loans to small businesses

March 04, 1993|By David Conn | David Conn,Staff Writer

NationsBank Corp., criticized in the past for failing to meet the needs of small businesses, said yesterday that it has created a new division aimed solely at lending to companies with up to $4 million in annual revenues in Maryland and the eight other states in which it operates.

The division, called Business Banking, should make more than $1 billion in new loans to small companies through 1996, company executives said during a news conference in Atlanta. They were unable to say to what extent NationsBank already has been lending to these businesses.

"Plain and simple, these companies are the building blocks of an economy," said Kenneth D. Lewis, NationsBank's general bank president. "We must look to them to put America to work."

NationsBank, the country's fourth-largest banking company, has targeted 59,000 businesses in Baltimore and 84,000 companies in the metropolitan Washington area that fit NationsBank's small business sales criteria.

Currently it operates 83 branches in the state, but will become the largest bank in the state if its acquisition of MNC Financial Inc., parent of Maryland National Bank and American Security Bank, goes through around September, as expected.

G.S. "Sandy" Fitz-Hugh Jr., a senior vice president in Bethesda, will head a group of 21 business development officers in the Washington-Baltimore region, the company said. The new group plans to call on more than 3,000 potential customers during 1993 and make $40 million in new loans this year.

The loans, up to $500,000, will fall under five categories: short-term working capital; term loans for expansion; fixed-asset financing, including for fleet, equipment and machinery; owner-occupied real estate loans; and leasehold improvements.

The company has been running a pilot version of the Business Banking division in Texas. Last year that unit made 1,064 loans worth $57.7 million in five Texas cities. The average loan was $53,500.

NationsBank stressed that no specific pool of money has been set aside for the small business market.

Several banks in the Baltimore area acknowledged the value of assigning lending officers to the small business market.

Rick Scheller, a vice president at the First National Bank of Maryland, said that seven or eight years ago his company set up a group of more than 30 lenders assigned to serve companies with revenues of $5 million or less.

Maryland National Bank has "a couple dozen" lending officers that both solicit loans of up to $500,000 and help the branches respond to loan requests, according to spokesman Daniel Finney. And Mercantile-Safe Deposit & Trust Co. said it has a smaller group devoted to business customers with up to $3 million in revenues.

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