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The golden rule for creating a successful business is to find a niche and then fill it. That's exactly what Manuel Iglesias and Terry Jaramillo are doing. The two are members of the management team behind Capital International SBIC LP, the first Small Business Investment Company (SBIC) to target Latino businesses. (The company gives some loans to non-Latino businesses, too.) Specialized SBICs typically serve niche markets, but Iglesias and Jaramillo saw an unmet need.
"With the consolidation of the banking system, local banks that served small, homegrown Latino businesses have disappeared," says Iglesias, whose company targets businesses primarily in Florida, New York and Puerto Rico. "Now these businesses are [dealing with] national banks not in touch with the community."
Capital International SBIC is a $5 million fund with the potential to access another $15 million. It targets companies two to four years old, with positive cash flows and proven track records, that are seeking $500,000 to $1 million. The loan process takes about two to six weeks.
According to Jaramillo, loan terms start at a minimum of five years; the company takes a 2 Â½ to 15 percent stake in the company, depending on its value and size. Capital International SBIC typically expects a seat on a company's board of directors and will recommend and monitor solutions to any deficiencies.
When it comes to investing, don't believe everything you hear.
The media love "top" lists, and we're no exception. This month, we get a little help from Louis Rukeyser'sBook of Lists (Henry Holt and Co. Inc.). The subject? Mary Farrell's List of the Top 10 Euphemisms When an Investment is Wrong. Farrell, a small-business investment expert, helps entrepreneurs read between the lines:
1. "The company's expenses were unexpectedly high."
Translation: I overestimated margins.
2. "Sales were less than expected."
Translation: I didn't notice all those competitors fighting for market share.
3. "Unseasonably cold weather hurt sales in the first quarter."
Translation: Of course it's always cold January through March, but I don't want to admit I was wrong.
4. "Earnings were disappointing."
Translation: Not for the company, which was right on plan, but I was hoping for a miracle to bail out this recommendation.
5. "We had a major earnings shortfall."
Translation: I don't have a clue what's going on.
6. "I'm fine-tuning my estimate."
Translation: What's a 50-percent cut among friends?
7. "Although our long-term recommendations remain intact, there are a few short-term problems."
Translation: Thank God in the long run, we'll all be dead and I won't have to answer for this fiasco.
8. "Management is unavailable for comment."
Translation: At least I've bought a little time to think up a creative explanation for this disaster.
9. "This correction is a good buying opportunity."
Translation: Stocks are in free fall.
10. "I'm downgrading to a neutral."
Translation: SELL, SELL, SELL.
By Robert McGarvey
It's a grim thought, but if you want to get a fast temperature reading on your company's solvency, check out the Bankruptcy Predictor Web site. Enter basic data--assets, liabilities, sales and such--and the predictor swiftly returns its verdict on your business's economic health. Think it's too simple? The predictor claims an 88 percent accuracy rate with small businesses.
Capital International SBIC LP, 1 S.E. Third Ave., 22nd Fl., Miami, FL 33131, (305) 373-6500