It's been said that bankers are the type of friends who will lend you an umbrella only when the sun is shining, and then ask for it back when it starts to rain. With that in mind -- and with interest rates hitting record lows this week -- it's time to go umbrella shopping at your local banks, before they decide they aren't making any new loans to small companies.

Why not wait for rates to go even lower? Because signs are growing that credit will be hard to get in the future. Banks are already clamping down on credit for big customers, and Federal Reserve Chairman Alan Greenspan said on Oct. 7 that lenders are becoming wary about taking on new risks. There's even talk of a recession next year. That's ominous talk indeed, since banks send small companies to the end of the line when the economy is weak.

But, astonishingly, banks aren't yet applying stricter standards to small applicants. In fact, interest rates are continuing to fall even as banks have been offering some of the most favorable terms in years, according to Federal Reserve data.

In the Fed's last survey, done in late summer, the average rate charged on business loans of less than $100,000 has fallen to 9.59%, from 9.73% a year earlier. By contrast, the average rate on mega-loans of more than $10 million -- in other words, loans to big companies -- actually rose to 6.76%, from 6.37% a year ago. More telling is that the markup for small companies has been shrinking, too. The most recent small-loan rate is just 2.83 percentage points more than banks charged their big customers, compared with a spread of 3.36 percentage points a year earlier. The upshot: Banks are offering deals that make you much more competitive with your bigger rivals.

It's pretty much the same story for loans of $100,000 to $1 million. The average rate stood at 8.6% in the August survey, compared with 8.74% a year earlier. Do the math, and you find banks are charging just 1.27 percentage points more than they would for your larger peers, compared with 2.37 percentage points in August of 1997.

DOUBTING THE DATA. If you wonder whether the data are too old, you're not alone. The Fed apparently had the same thought amid the financial panic during September. So it commissioned an extra version of its quarterly survey of bank lending officers to find out how the banking system was reacting. Sure enough, the survey confirmed that banks had begun cracking down on big and medium-size borrowers -- 24.5% of domestic lenders said they tightened standards for applicants. But only 5.7% did the same for small borrowers -- and that tightening was nearly erased by the number of banks that relaxed their standards. Terms, including costs, covenants, and collateral, remained unchanged for small borrowers -- even as their larger rivals were being forced to jump through tighter hoops. The only real negative news for small companies was that bankers are no longer easing their terms, which may indicate that conditions for borrowers are as good as they're going to get.

"The banks will be the first to tell you the window is still wide open for small and midsize companies," says Irwin Kellner, a former economist for Chemical Banking and now an economics professor at Hofstra University on Long Island, N.Y. "I don't know of any small businesses that are having trouble getting money." That is, of course, if they don't get cocky. "They generally pay higher rates, are subject to far more scrutiny, and their collateral is more secure than large businesses," says Kellner.

If you're ready to go shopping, what's the best deal you can expect? That's hard to say because rates and terms vary tremendously by region and industry. But, on average, the Fed's August data provide a few shopping tips:

Best rates. Check out U.S. branches of foreign banks. Their interest rate on the smallest loans was more than 1.3 percentage points below the industrywide benchmark and nearly a point cheaper for loans up to $1 million. Just make sure you like the deal you get, because the foreign banks were about four times more likely to slap on a prepayment penalty than domestic banks.

Best terms. Small domestic banks had the highest starting rates, but, in return, they offered more stability. Their average maturity or repricing interval -- that's the time you have until the loan is due or the rate is reset -- was 238 days for loans up to $100,000 and 261 days for loans up to $1 million, compared with industry averages of 156 and 123 days, respectively. You'll get the shortest leash from large domestic banks, which repriced their loans in as little as 45 days for the smallest borrowers.

Whether a bank in your area offers these terms is another matter. These are averages rather than industry standards. Still, if the terms offered by your banker are way out of line, you might wave the Fed's data around and ask for something closer to the market rate. You might also improve your chances by going to an institution that's been actively pursuing more business from small companies. Two standouts at midyear among the major national banks were NationsBank and Bank of America. According to Veribanc, a bank-monitoring firm in Wakefield, Mass., loans outstanding as of June 30 to small businesses at these two financial giants rose 22% and 13%, respectively, from the same time last year. For banks in your region that are considered small-business friendly, check out our interactive survey based on data from the Small Business Administration.

Move now, while your fair-weather friends at the bank are still in the mood, and you might be able to secure some extra capital for hard times.

By Rick Green in New York
rick_green@businessweek.com