Lending spree. (Wall Street West).Century City financier Marshall Geller, who heads the merchant bank Geller & Friend Capital Partners, recently formed a "debt SBIC SBIC Small Business Investment Company SBIC Sustainable Buildings Industry Council SBIC Singapore Bioimaging Consortium (Singapore) SBIC School Bus Information Council SBIC Saudi Basic Industries Corporation SBIC Scsi Bus Interface Controller " to lend to small, growing companies in 11 Western states. A debt SBIC (debt-leveraged Small Business Investment Company) is different from the more common "equity SBIC," in that the fund, which has been christened St. Cloud Capital, will only lend, although sometimes it will receive warrants that can convert to equity. The appeal of a debt SBIC is in its leverage. For every dollar it raises and lends, the federal government will effectively kick in another three. Geller and other investors have kicked in roughly $16 million to fund St. Cloud, giving it $64 million in lending power with the three-to-one federal match. If Geller reaches the money-raising limit of $20 million in private equity, the fund can lend up to $80 million. Word has gotten around town about the new pot of capital. "I am getting two to three calls a day, from legitimate companies," said Geller, who is chairman of St. Cloud. Typically, small, growing companies raise funds by borrowing from a commercial bank or seeking private equity from investment bankers Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. . But the banks have been stingy stin·gy adj. stin·gi·er, stin·gi·est 1. Giving or spending reluctantly. 2. Scanty or meager: a stingy meal; stingy with details about the past. of late, and investment bankers are expensive. Besides, the public's appetite for equity in speculative ventures has dimmed considerably in the past two years. Geller is especially eager to lend to small, publicly held companies. "We are looking to make bridge loans, or debt with equity kickers Equity kicker Stock warrants issued attached to a new debt, preferred or common stock issue to improve the salability of the issue. equity kicker ," he said. It's harder to sell a loan or an equity stake in a private company, because there's no market, Geller said. "You could have a great company, but no buyers," he said. With a public company, "You just have to worry about making money." On a recent deal, St. Cloud lent $2 million to a small public company at 10.5 percent interest, and will also receive a 5 percent stake. The loan is secured by the assets of the company, and with the leverage provided by the SBA SBA abbr. Small Business Administration Noun 1. SBA - an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government , St. Cloud could make as much as a 30 percent annual return, Geller said. Contributing columnist columnist, the writer of an essay appearing regularly in a newspaper or periodical, usually under a constant heading. Although originally humorous, the column in many cases has supplanted the editorial for authoritative opinions on world problems. Benjamin Mark Cole Mark Cole is a multi-instrumentalist blues and roots musician based in Gloucester, UK Music Mark primarily writes and performs blues music but also writes and performs music influenced by other American roots music genres such as americana, cajun, zydeco, bluegrass and writes about the local investment community. He can be reached at sevencontinents@mindspring.com. |
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