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Psst! Pass It On
 

Kalamazoo Banner's supplier provided them with a loan to help them out in a crunch.
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Leaning on suppliers for working capital is as American as apple pie. Unable to pay their bills in 30 days, many small companies wind up stretching their payments out to 60 days or more. Suppliers so abused often howl; some waste no time in cutting back credit and levying penalties.

Once in a blue moon, however, you run across a compassionate supplier who's only too happy to help a business that's in a crunch. Such was the good fortune of Roger Lepley, CEO of Kalamazoo Banner Works, in Kalamazoo, Mich. In 1989 the $3-million banner manufacturer was running about 60 days late on payments when one of its biggest suppliers took Lepley aside. "He'd noticed we hadn't been paying on time, and he asked, 'Can I lend you some money?" says Lepley.

After reviewing Kalamazoo Banner's finances, the supplier volunteered to provide a six-year loan of $100,000 (secured by the banner company's real estate), at two points over the prime rate. To make the deal even more attractive, the supplier asked for no principal payments during the first year -- only interest.

Lepley points out that the loan was subsequently converted into preferred stock at the urging of a banker who was about to make Kalamazoo Banner a loan. (Currently, the kindhearted supplier holds 7,500 shares of nonvoting preferred stock.) But in the belief that what goes around comes around, Lepley's supplier -- who once upon a time got a boost from one of his suppliers -- won't be fully satisfied until Kalamazoo Banner extends a similar courtesy to another deserving business.

Lepley vows that he'll make good on that pledge as soon as he can afford it. "It was a really good deal for us," he offers. "And I like the idea of helping someone else." -- Phaedra Hise

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Last updated: Sep 1, 1993




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