Buddy System

Terri Dial, vice chairman and head of the Business Banking Group at Wells Fargo Bank, says her bank sees small business as a crucial growth market. Growth engines that spurred bank growth in the 1980s are less reliable now--big corporations often skip bank financing in favor of the capital markets, and large-scale real estate development has slowed considerably. "As a market segment, [small business] is growing," Dial says.

To capitalize on this growth, Wells Fargo created a line of products and services for small businesses in the late 1980s. Among the first products introduced were a flat-fee small-business checking account and ATM banking for small companies.

Once available only to individuals, ATM cards with various access levels are now issued by Wells Fargo to small-business owners and their employees. In addition, Wells Fargo's National Business Banking Center provides small-business clients with account information and assistance via telephone 24 hours a day.

The frequent interaction with and feedback from small-business customers also led Wells Fargo to make some improvements in its small-business lending program. "When we talked to small-business owners, they said they weren't being served very well," Dial says. "So we made some dramatic changes in lending. We found out one reason small businesses complained about access to credit was that they just needed small loans."

Traditionally, paperwork and processing time have made lending amounts in the $25,000 range too costly for banks. By streamlining the application process and reducing paperwork--not to mention making a profit from the additional fees for new banking products for small businesses--Wells Fargo has been able to make more small loans. Dial says the majority of the bank's small-business loans are now for less than $50,000. The upshot? In 1989, Wells Fargo's small-business loan portfolio was about $300 million, according to Dial. Today, it tops $5 billion.

This article was originally published in the March 1997 print edition of Entrepreneur with the headline: Buddy System.