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The Money Store's Small-Biz Unit Lives On
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In fact, parent First Union Corp. plans to step up its backing of entrepreneurs
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The Money Store Inc. may be shutting its doors, but its legacy of small-business
lending won't end. Best known for giving loans to people with poor credit and for the antics of baseball pitchman Phil Rizzuto, the Money Store was also a longtime leader in approving federally guaranteed loans for small businesses. So last week's announcement that First Union Corp. -- which bought the Money Store for $2.1 billion just two years ago -- was closing the consumer-finance company might have left some entrepreneurs wondering if a friendly source of cash was disappearing as well.
In fact, the Charlotte-based bank is keeping the small-business unit, which was
renamed First Union Small Business Capital last year. And a spokeswoman insists
the restructuring will allow the bank to be more attentive to entrepreneurs'
needs. "Small business is one of our core businesses," says Karen Kitzmiller spokeswoman of Charlotte-based First Union.
IDENTITY CRISIS.Perhaps so. But that core has crumbled a bit in recent years. The small-business operation suffered something of an identity crisis after being taken over by First Union. There were layoffs and employee defections. And last year, the unit slipped to No. 2 behind rival Heller Financial in Small Business Administration-backed loans.
Now the bank is aiming to regain its top status in the booming field, though
Kitzmiller acknowledges that won't be easy. First Union's strategy calls for better cross-marketing of the SBA-backed loans and traditional lending services. At the same time, the company is still trimming the operation's payroll. Twenty-three workers, or 5% of the small-business unit's workforce, were given layoff notices this week as part of the shuffle.
Still, rivals and analysts expect First Union to remain a strong presence in the
field. And a spokesman for the SBA, when asked about the demise of the Money Store, said simply: "We have no concerns."
By
Julie Fields
in New York
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Copyright 2000, Bloomberg L.P.