The company: With $461 million in SBA-backed loans in 1997, AT&T/Newcourt ranks as the second-largest SBA lender after The Money Store. Originally part of AT&T, the company was founded in 1985 to help local phone companies finance purchases of telecommunications equipment. In 1992, it expanded into the rapidly expanding small-business loan market. After a merger with Toronto-based Newcourt this year, the company is now part of the second-largest diversified financial services company in the country after G.E. Capital. Plans call for AT&T/Newcourt to drop Ma Bell's name on Jan. 1, 1999.

The goal: AT&T/Newcourt likes to get small-business deals done quickly. It has more than 50 salespeople combing the country for worthy applicants. A smaller loan -- say, of less than $100,000, which doesn't require collateral, appraisals, or a title research -- can be closed in a week. On the outside, expect 45 to 60 days for approval, especially for startups. Frank C. Isganitis, director of AT&T Small Business Lending, says a company with cash flow to cover expenses and loan debt service that has been leasing its facilities or office space for three to five years and now wants to buy it is considered a "home run." AT&T/Newcourt loans are just loans. Isganitis says the lender isn't looking to second-guess your day-to-day operations after the loan is signed, nor does it want to sit on your board of directors.

The typical deal: After four years in Las Vegas government, Don Schlesinger saw the city lacked the money to provide a quickly growing population with parks. So he decided to stop griping and do something about it. He came up with the idea to open a recreation area complete with softball fields, skating rinks, and a video arcade called Las Vegas Sportspark. Schlesinger struck a deal with the city of Las Vegas, allowing him to build the facilities on city park land and charge admission. The catch: He couldn't own the land. Schlesinger says four local lenders turned him away. Then, he hooked up with Richard Freeman, a local AT&T Capital salesman who wasn't fazed by the fact that Schlesinger would be building on leased land. A team of AT&T loan and construction experts helped him put together a $6 million plan, involving a $4.5 million AT&T loan for 10 years at prime plus 1.5% (currently 9.75%). The other $1.5 million came from money Schlesinger had earned in his previous law practice and from his partner, Linda Fernandez. Schlesinger says other lenders seemed hamstrung by bureaucracy, while AT&T moved things along in a month. Las Vegas Sportspark is scheduled to open this January.

The process: AT&T first wants cash flow to cover expenses and debt service. If that's not possible, it looks for collateral. AT&T stays away from strict credit scoring. "We're looking to get into underserved markets, and, often enough, there's a story there that scoring just doesn't convey," says Isganitis. Also expect your local AT&T salesperson to help push the process. In many cases, he will help you complete the company's 30-page application and will facilitate whatever approval you'll need up the AT&T ladder. The most important documentation you'll have to provide is personal and business tax returns. Also expect to supply a personal financial statement and balance sheets, and be prepared to discuss potential competition and how you plan to stand out from the pack.

What works: Isganitis says experience succeeds where capital falls short. Someone opening a hotel or motel franchise stands the best chance if he or she has several years' experience managing a motel or, better yet, keeping the books there. "We're looking for someone who knows the nuts and bolts, someone who can show us they have the business acumen to make things work," says Isganitis. "The assistant night manager of a 7-Eleven who's looking to start a convenience store of his or her own will have what it takes."

What doesn't: Sloppy due diligence, particularly when it comes to real estate loans. One case in point is the sad tale of a Southern distributor of guitars, sheet music, and sound equipment. The company approached AT&T with a proposal to purchase a building where it was renting space. The deal looked like a winner, until the borrower disclosed that the property had previously housed a gas station. At a cost of $1,500 to $2,000, AT&T made the company hire an engineer, who found tanks underneath the building. The environmental liabilities killed the deal. The company not only lost the loan but had to relocate. "If there's something that triggers a red flag, it's better to spend the money on the front end before you're married to a deal [than] have a much larger liability later on," says Isganitis.

Parting advice: Smart small-business owners should keep cash on their balance sheets to a minimum, says Isganitis. Instead of holding on to huge bank deposits, it's best to put as much back into the business as possible, says Isganitis. "If you're small and really want to grow, there's really no other way to go."

By James A. Anderson

To: LENDER PROFILES