SBA Reactivates Recovery Loan Queue as Funding Is Exhausted

SBA has reactivated its Recovery Loan Queue today. The queue will operate in the same manner as when originally implemented in November 2009.

Here is the notice from SBA-

http://www.sba.gov/idc/groups/public/documents/sba_homepage/news_release_10-32.pdf

SBA 7(a) Weekly Lending Update

As of May 22, 2010, the SBA has approved $9,425,913,000 in SBA 7(a) loans since October 1st, 2009. This compares to only $4,788,315,000 through the same period last year.

25% of the loans approved so far this year has been for start-up businesses. Two years ago almost 40% of SBA 7(a) loans were for start-ups.

SBA Rate Update

7(a) Indices
PRIME RATE: 3.25%
SBA LIBOR Base Rate May 2010 = 3.28%
SBA Fixed Base Rate May 2010 = 6.48%________________________________________________
504 Debenture Rate for May
The debenture rate is 4.11% but note rate is 4.17% and effective yield is only 5.52%.

FDIC Quarterly Banking Profile

The FDIC released the Q1 Quarterly Banking Profile today. The FDIC listed 775 banks with $431 billion in assets as “problem” banks in Q1, up from 702 banks with $403 billion in assets in Q4, and 305 banks and $220 billion in assets in Q1 of 2009.

Bump in the Road for Commercial Real Estate Values

The Moody’s/REAL All Property Type Aggregate Index measured a 2.6% price decline in commercial properties in February. This decrease comes on the heels of three consecutive months of rising prices, and brings the level of commercial property prices 41.8% below the peak measured in October 2007. Values are now down 25.8% from a year ago, and 41.6% from two years ago.

For a copy of the report, drop me an email.

The SBA and fugacious

fugacious
(fyoo-GAY-shuhs)
Lasting a very short time.
From Latin fugere (to flee) which also gave us other words such as fugitive
_____________________________________________________
TIP OF THE WEEK

On February 17th , 2009, SBA’s secondary market program for First Lien Position 504 Loans (“Program”) was established by statute in Section 503 of the American Recovery and Reinvestment Act of 2009 (the “Recovery Act” or the “Act”).

On November 5th , 2009 SBA published the guide for the Secondary Market First Lien Position 504 Loan Pool Guarantee Program.

On May 13th , 2010, the SBA announced the start of the Secondary Market First Lien Position 504 Loan Pool Guarantee Program.

On July 15th, 2010, the first loan pools are expected to be ready for sale.

On February 16th, 2011 the Secondary Market First Lien Position 504 Loan Pool Guarantee Program terminates.

If that sounds fugacious, keep in mind that there are only 10 working days left until Recovery Act SBA loan provisions providing an increased guarantee and fee reductions expire.
_________________________________________
Indices:

PRIME RATE: 3.25%

SBA LIBOR Base Rate May 2010 = 3.28%

SBA Fixed Base Rate May 2010 = 6.48%
________________________________________________
504 Debenture Rate for May

The debenture rate is 4.11% but note rate is 4.17% and effective yield is only 5.52%.
________________________________________________
AHEAD OF THE YIELD CURVE

Did you notice that the SBA LIBOR base rate jumped up this month?

Historically, LIBOR rates have consistently been about three percentage points less than the Prime Rate.

In November of 2008, the SBA LIBOR base rate was provided as the secondary market for 7(a) guaranteed portions died when LIBOR and PRIME rates actually converged.

Now LIBOR is once again acting up.

30 day LIBOR is at .34 percent while 90 day LIBOR is at .45 percent. This is at the highest level since last August. The rate was as high as 482 basis points in 2008 during the global credit crisis.

The fear and paranoia extend to the long end of the yield curve.

Last week a $16 billion sale of 30-year bonds drew a yield of 4.49 percent. The yield has dropped from 4.77 percent at the last sale of the securities on April 8.

The bond’s average yield was 4.49 percent from Dec. 31, 2007, through Sept. 12, 2008, just before the collapse of Lehman Brothers.

It is now at 4.32 percent.

Here is what the 30 year bond has been doing:
2001- 5.49
2002- 5.43
2003- ND
2004- ND
2005- ND
2006- 4.91
2007- 4.84
2008- 4.18
2009- 3.89
2010- 4.61

What a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.

What does all this mean?

I don’t know. It would appear that the savings from low variable rates of interest should continue for an "extended" period.
_________________________________________________
OFF BASE

The fugacity of one’s life can be predicted based upon a smile.

When researchers Ernest Abel and Michael Kruger from Wayne State University examined the 1952 Baseball Register photos of 230 Major League Baseball players who started playing before 1950, they found the span of their smile accurately predicted their life span. The players were rated as to "no smile" if they stared blankly at the camera, "partial smile" if the muscles around their mouths were only slightly raised and "full smile" if they had a wide grin with both cheeks raised.

The researchers found that the wide-grinning players were half as likely to die in any year compared to non-smilers. As of June, 2009, the players who were deadpan for the cameras lived an average of 72.9 years, those with slight smiles died at age 75 and those with the most beaming smiles lived the longest — 79.9 years. Of the 230 players, 46 players were still alive. The scientists also did a follow-up study to see whether attractiveness correlated with longevity and found that good looks did not add significantly to life span. In any case, far fewer individuals had full smiles — 23 — than partial (64) or no smiles (63).

So smile, you'll live longer.

SBA Lending is the ONLY Government Program That Works

According to the Congressional Oversight Panel's recent report on the government's efforts to stimulate lending to small business, nothing is working with one notable exception- SBA lending.

For a copy of the Panel's recent report go here- http://cop.senate.gov/documents/cop-050709-report.pdf

According to the SBA, lending is up over 90%. Check out their report card- http://www.sba.gov/idc/groups/public/documents/sba_homepage/recov_perform_rptcard_04_2010.pdf

SBA Rate Update

504 Debenture Rate for May
The debenture rate is 4.11% but note rate is 4.17% and effective yield is only 5.52%.

SBA Rate Update

Indices:
PRIME RATE: 3.25%
SBA LIBOR Base Rate May 2010 = 3.28%
SBA Fixed Base Rate May 2010 = 6.48%

The maximum rate a lender can charge for a 7(a) loan is one of the above indices plus 2.75%

Why did the unemployment rate rise?

Why would the unemployment rate increase in April if payrolls increased so sharply? The short answer: more people are looking for jobs.

From the Wall Street Journal- http://blogs.wsj.com/economics/2010/05/07/why-did-the-unemployment-rate-rise/

How the SBA turned $730 million into $26 billion

The SBA received $730 million in the American Recovery and Reinvestment Act (ARRA) to help unlock the small business lending market and get capital flowing again to America’s small businesses.

With that money, SBA has supported more than $26 Billion in Recovery Loans to Small Businesses.

More detail can be found at http://www.sba.gov/idc/groups/public/documents/sba_homepage/sba_rcvry_aara_imp_factsheet.pdf

The SBA and wieldy

wieldy

(WEEL-dee)

Easily handled or managed.

From Old English wealdan (to rule).
_____________________________________________________
TIP OF THE WEEK
SBA loans are wieldy.

Recovery Act SBA loan provisions providing an increased guarantee and fee reductions expire on May 31st.

There is still time to take advantage.

Pending legislation providing an increased guarantee, continued fee reductions, and increased loan amounts still needs to pass.
_________________________________________
Indices:
PRIME RATE: 3.25
SBA LIBOR Base Rate April 2010 = 3.25%
SBA Fixed Base Rate April 2010= 6.57%
________________________________________________

504 Debenture Rate for April
The debenture rate is 4.36% but note rate is 4.42% and effective yield
is only 5.774%.
________________________________________________
AHEAD OF THE YIELD CURVE

Last week the Federal Open Market Committee said that they would continue to keep rates low for an “extended period.”

One of their reasons is because “employers remain reluctant to add to payrolls”.

That does not seem to be the case with small businesses.

Small businesses added approximately 66,000 new jobs in April and roughly 300,000 new jobs since June 2009, when the upward trend in employment began.

Intuit, the accounting software company, said that small businesses added about 66,000 new jobs in April. Intuit released the monthly report, based on figures from the country's smallest businesses that use Intuit Online Payroll. The Intuit Small Business Employment Index reflects data from approximately 55,000 small business employers who use Intuit Online Payroll.

Keep your eye on Friday’s payroll report from the Department of Labor.
Here is a summary of payroll employment and this week’s interesting little table of data:
March 162,000
February (36,000)
January (26,000)
2009
December (150,000)
November (11,000)
October (111,000)
September (215,000)
August (201,000)
July (304,000)
June (443,000)
May (322,000)
April (504,000)
March (699,000)
February (651,000)
January (655,000)
2008
December (681,000)
November (597,000)
October (423,000)
September (403,000)
August (127,000)
July (67,000)
June (100,000)
May (47,000)
April (67,000)
March (88,000)
February- (83,000)
January- (76,000)

What does all this mean?

The big increase in jobs last month likely reflected a rebound from the February blizzards that set seasonal snowfall records in cities including Washington and Philadelphia, shuttering some businesses during the week of the government survey. Any hiring that would have taken place that week is figured into the March job count instead. The March increase also included 48,000 temporary workers hired by the government to conduct the 2010 census. The economy has lost 2.3 million jobs over the last year and 8.2 million jobs since the beginning of the current employment recession. Employment peaked in December 2007, and this recession is by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession with a peak of 10.8 percent was worse).

Futures on the CME Group Inc. exchange showed a 64 percent chance the Fed will raise its target rate for overnight bank lending by at least a quarter-percentage point by December, compared with 63 percent odds a week ago. The central bank has kept the rate between zero and 0.25 percent since December 2008.
_________________________________________________
OFF BASE

Today, May 3rd, in 1899 Tom O'Brien of the New York Giants receives perhaps the first intentional walk in major league history. In the eighth inning, with runners on second and third bases with one out, Ed Delahanty of the Philadelphia Phillies tells teammate pitcher Jack Fifield to walk O'Brien, who has hit well all day. Then next batter, Fred Hartman, hits into a double play.

Intentional walks are normally issued for two reasons: to bypass a good hitter for a weaker one and/or to set up a double play. The usefulness of intentional walks for either reason is a matter of considerable argument, and different managers have taken very different attitudes toward the intentional walk. Walter Alston even changed his attitude in mid-career, moving from issuing 101 (the 8th most ever) in 1967 to just 9 (the fewest ever) in 1974. In 1974 the Dodgers did go on to the World Series.

A walk is only considered intentional if the catcher gives a clear sign that he is calling for an unhittable ball. Normally he does this by standing up instead of crouching and reaching one hand outside. The pitcher then throws the ball toward the catcher's hand, and the catcher steps over to catch the ball.

The single season record for intentional walks came in 2004 when Barry Bonds was intentionally walked 120 times. One of those passes came on April 17th against the Dodgers. In the bottom of the third inning with two outs and a runner on second, Jose Lima intentionally walked Bonds. The next batter popped out and Lima went on to win the game.

The intentional walk it is often referred to as a "four-finger salute". This reference stems from the manager's holding up four fingers to signal an intentional walk to his pitcher or catcher.