This study makes several contributions to the literature. It documents the value of effective relationships between banks and borrowers and in particular shows how these relationships can facilitate extending credit to entrepreneurial firms. This study provides evidence of the utility of marketing research on customer orientation and organization behavior research on conflict management to identify the conditions when banks and SMEs develop mutually beneficial relationships. Banks that are highly customer-oriented lay the foundation for cooperative conflict management between banks and the firms where they discuss and solve their difficulties openly and mutually. This open dialogue helps banks feel knowledgeable and confident that they can extend credit and that they will be able to keep transaction costs acceptable as they deal effectively with issues and problems that arise during the loan period.