The Man Who Likes Risk

Walter E. (for nothing) Heller _ is a grey-thatched, cigar-puffing financier whose business is taking risks that no prudent banker would consider. As head of Chicago's Walter E. Heller & Co., the largest independent U.S. commercial finance firm, he has helped finance the birth and growth of more than 13,000 small and medium-sized businesses--about one in 23 of all U.S. manufacturing corporations. Heller not only pumps in vital funds where banks shun the risk, but freely dispenses the advice and guidance that many struggling firms need as badly as money. His aim is to make them so Dig and fat that they no longer need him. In the process, his own company has grown big and fat: this week it announced record earnings of $2.74 a share, the twelfth consecutive yearly record.

12% Interest. Shrewd, autocratic Walter Heller is the leader in a fast-growing type of commercial financing that only in recent years has become completely respectable. When banks lend money to firms, they do so on the basis of assets and good credit standing, a yardstick that often rules out loans to small or struggling businesses. Heller, on the other hand, does not bother himself about the borrower's credit, takes on firms with chronic management or financial ills as readily as sound companies that have fallen on hard times. Reason: he accepts a company's accounts receivable (i.e., money owed it) as collateral, thus putting his faith in the credit of his clients' customers. Unlike most banks, he can also administer a quick dose of ready money through factoring, i.e., buying up the firm's accounts receivable, then collecting them himself for a 1/2% to 2% fee.

Heller gets his own money through regular banking channels at an average interest rate of 5^ 1/4%, charges 12% interest for his loans. Some bankers consider the rate outrageous, but Heller's customers rarely complain. Says a Minnesota businessman now negotiating a Heller loan: "The bank interest, when you consider everything, works out to 8% or 9%, and you have to keep a big balance in the bank, on which you get no credit or interest. For the service Heller performs, his rates are not unreasonable. And we don't have to call Mr. Heller and say 'Please, can we buy a turret lathe?' "

Jewel Robbery. Many a sickly baby has grown into a hefty corporate giant under Heller's sure guidance; the firm has given a helping hand to such companies as Continental Motors, National Airlines, Helene Curtis, Tropicana Products and United Artists. The former head of Michigan's Clinton Engine Corp. was so grateful for Heller's help that he recently took a quarter-page ad in the Wall Street Journal to express his thanks. "The average bank doesn't know what sympathy is," says Eugene T. Barwick, president of Georgia's E. T. Barwick Mills, which has grown to a $45 million corporation in ten years. "Heller is very sympathetic to the problems of a growing company, and has experience that the average lending agency just does not have."

That experience began accumulating when Walter Heller, the son of a wealthy sausage-casing maker with plants around the world, went into the jewelry business at 22, after a year at the University of Michigan. Says Heller: "My father thought I'd lose less money there than anywhere else." Six years later, Heller got out of the business after thieves took off with $600,000 worth (insured) of his jewels. In 1919 he set up a commercial-loan company, was astounded when a bank offered him a $100,000 line of credit. He chalked it up to the favorable impression he had made on the banks' officers--until he learned that good old dad had secretly guaranteed the $100,000.

How Can We Lend? "Heller's attitude was not "Why should we lend this man money?" but "How can we lend this man money?" Tough and opinionated in sizing, up a deal, Heller nonetheless pushed his company ahead by treating many a nervous corporation head as a person instead of a risk. He often turns down a borrower with a sharp "nonsense" before the businessman has even finished making his case. Yet he also startles businessmen by granting them huge loans over the telephone--and telling them to work out the details later.

Heller can do this because he has a vast knowledge about most businesses, is back-stopped by a staff of experts. Four hundred strong, they breathe gently down a borrower's neck, go over his books thoroughly three or four times a year, shoot out a barrage of advice and warning that keeps companies on their toes. Through this method, Heller not only protects his own money but often prevents companies Tom becoming overextended, accumulating too much inventory, falling into ill-advised deals. He sometimes makes bad guesses: he backed Sydney Albert's overexpanded Bellanca empire before it collapsed (TIME, Oct. 22, 1956), soon after was hit by two frauds totaling $2,200,000 --though both losses were cut heavily by insurance. But his default record has averaged a low one-tenth of 1%.

With a sly slap at the banks, Heller describes himself as a foe of "institution-alization," gives his men great latitude to make their own judgments. "A man can assume his own responsibility here," he says. "I never rub a man's hair in a mistake." Because the firm's response is so fast and sure, many clients who have graduated into the "bankable" class prefer to continue working with Heller.

Still trim and vigorous at 69, Heller gets to his office at 7:40 in the morning, keeps a strong personal hold on the company. He sees nothing but growth for his type of lending, figures that in a growing economy there will always be enough firms on the way up who need a firm but friendly guiding hand.

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