Ask Robin Wold, owner of Robin's Food Distribution, how she won a six-figure credit line from a local banker, and she laughs. "Nobody came running to me with open arms."
Wold founded her $15-million company in Chicago in 1980, but it was six years before she could persuade a banker to grant her a tiny loan. "I had landed my first contract with the city of Chicago, which guaranteed me about $150,000 worth of income. But I didn't have the cash flow to help build up my inventory and service that contract."
Help came from a business support group, Chicago's Women's Business Development Center, which put her in touch with a local bank that was willing to lend her $20,000. "The bank wouldn't give me a line of credit, which was what I really needed, but even a tiny loan gave me a chance to start building a good credit history," says Wold. She made every principal-and-interest payment promptly and, as she says, "made sure I never paid my suppliers late, either. I wanted to ensure that no banker would ever find anyone who would complain about us."
The next year, as Wold won more government contracts she applied for a traditional line of credit. "My banker gave me a $150,000 line, as long as I was willing to assign payment from the government contracts directly to the bank." Again, the arrangement was far from ideal.
"Every week, we continued to visit new bankers to talk about our growth prospects, our sound financial position, and our good credit history," Wold recalls. With her company at about $1.5 million in sales and with "marginal profitability," she decided to hire an outside certified accountant to advise her on how to enhance the sophistication and credibility of her banking presentation. "It was intimidating at first, but I grew to view the process as a free education. You learn something about dealing with bankers, even if you get turned down 20 times."
One lesson Wold learned was patience. "It probably took us nine months to negotiate a better arrangement with a new bank that gave us a $250,000 line of credit. The stress was unbelievable." The effort paid off: once the new bank committed itself to Robin's Food Distribution, it voluntarily doubled the company's credit line within the year.
Now that Wold's credit limit is currently at $1.25 million, she says she's hit a new wall. "As we keep growing, we need a bigger line; I'm determined to prove that we can handle it by keeping our financial reports extra clean and by building a flawless payment history."