The company: Chicago-based Heller is one of the top non-bank lenders to small- and midsize businesses in the U.S., claiming the No. 3 spot for SBA-guaranteed deals. One thing that sets 79-year-old Heller apart is that lending to smaller companies is a "strategic focus," says Stephen Ban, director of investor relations. "In the case of a recession, we won't pull out of this market."

Heller is an SBA "preferred lending provider," meaning that once Heller has vetted a borrower, it doesn't need prior SBA approval to make the loan. That puts cash in your hands faster. Its small-business borrowers cut across all categories -- retail, service, wholesale, and manufacturing. The company, which is controlled by Fuji Bank, went public in the spring of 1998 ( HF).

The philosophy: Heller is a pure lender. It doesn't want a piece of your company to lend you money -- now or later. In fact, Heller's small-business specialists look less at collateral than cash flow when evaluating prospective borrowers. They'll lend to a small business that can meet ongoing obligations and pay the debt, even if its assets are worth less than the amount of the loan. The focus on cash flow opens the money sluice to more service companies, which typically have few assets and more trouble borrowing.

A Heller specialty is long-term loans that cover most of the price of an asset. Both mean less cash going out of a business while it's young. A conventional real estate loan for a small business tends to be for only about seven years, compared with Heller's 25 year terms for SBA financing and 15 years for conventional loans, says Joy Fauvre, marketing director at Heller Financial Small Business Lending in San Francisco. In fact, Heller modeled its conventional small-business real estate loans after SBA programs, because its experience showed how much small businesses benefitted from longer terms and low down-payments, she says.

The typical deal: George Constas, president and owner of General Process Controls, a San Ramon, Calif., distributor of valves and equipment, was able to slash the cost of his office and warehouse space in Northern California, after taking out a $1.7 million SBA-backed loan from Heller earlier this year and buying a three-building complex. He moved his 35 employees into 20,000 square feet from a 10,000-square-foot space he was leasing. He took out a 20-year loan at 9%. After putting down $300,000, he now pays $14,000 a month, compared with $17,000 before.

Constas says his experience with banks had been frustrating. They didn't seem to understand his business. Heller's experience with small businesses seemed to give it "a higher tolerance of risk," he says.

The process: It's straightforward, says Fauvre. Heller needs to see three years of tax returns, business and personal; current financial statements for the business; a personal financial statement; and a summary of existing debt. The lender also scrutinizes the personal credit of any shareholder with a 20% or more interest in the business. Investor relations director Ban says that when an applicant doesn't make the cut, Heller tries to work with it to find another program or restructure its assets to make it eligible for funds.

What works: Borrowers must be able to state clearly and thoroughly why they need the money and present a thorough business plan that looks at contingencies, says John Guy, head of Heller's small-business lending unit.

Constas of General Process Controls attributes part of his success in getting the loan to a middleman -- a so-called packaging company -- that brokered the loan and handled most of the paperwork. He paid The Morrison Co. about $20,000 to make a polished presentation to Heller and other lenders and to perform other financial services during the life of the loan. "If I were to spend the time preparing the profile, it would have cost me five times as much," Constas says, given the value of his time.

What doesn't: Lowballing your cash requirements to keep your debt low. "We find that people don't plan for financial needs the way they plan for supplies," Guy says. "We encourage them to borrow more than they think they might need." It's tough for small companies, he acknowledges. They may mistrust the motives of a lender who wants them to borrow more than they requested. But it's better to have extra than to go hat in hand to an angry banker after you've missed a payment. Another poor choice: tax strategies that minimize profit on your returns. They can hurt your chances of getting a loan.

Parting advice: Heller values candor from its borrowers. "If they find themselves in trouble, the sooner they tell us, the better," Guy says. "Sometimes people make this much more complicated than it needs to be."

By Julia Lichtblau and Erin Joyce in New York
julia_lichtblau@businessweek.com

To: LENDER PROFILES