Monday, November 1, 2010

The SBA and dibs



The right or claim on something.

The origin of this term is unclear. Some think it came from shortening of dibstones, a children's game played with pebbles. The 1967 edition of "Dictionary of American Slang" states that the word "dibs" comes from the verb to divvy.

There are only 60 days left until the 90 percent guaranty and guaranty fee waiver expire for SBA 7(a) loans.

Currently the 7(a) loan program has dibs on debt refinance.

If you have maturing debt on owner-user real estate, a SBA 7(a) guaranteed loan can be used to refinance that debt.

Based upon feedback from SBA at the NAGGL conference, the use of 504 loans for debt refinance won't happen for awhile.

With a SBA 7(a) loan, not only can borrowers potentially save up to $166,250 in SBA guarantee fees, they will benefit from a loan that is fully amortized and have a rate of interest that will be "exceptionally" low for an “extended” period of time.
SBA LIBOR Base Rate October 2010 = 3.26%
SBA Fixed Base Rate October 2010 = 5.36%

504 Debenture Rate for October
The debenture rate is 3.11% but note rate is 3.16% and effective yield is only 4.521%.

The Federal Reserve Open Market Committee meets this week.

Will they continue to say that they will keep interest rates “exceptionally low” for an “extended period?”

The Fed has repeated the “extended period” language at each meeting since March 2009, well over a year ago.

One of their reasons is because, as they put it, “employers remain reluctant to add to payrolls”.

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:

September (95,000)
August (57,000)
July (66,000)
June (175,000)
May 431,000
April 218,000
March 230,000
February (36,000)
January (26,000)
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)
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?

This extended period of low interest rates will last until the economy begins to demonstrate sustainable improvement in job creation.

In September, employers fired 95,000 workers after a revised 57,000 decrease in August. Most of the job losses actually came from the government as census workers and other government employees were let go. Private payrolls that exclude government agencies climbed 64,000 in September. Companies hired 93,000 workers in August and 117,000 in July.

Things are slowly, too slowly, actually getting better.

In the meantime, interest rates should remain exceptionally low for an extended period.


Happy Birthday Will Rogers.

Thursday is Will Roger’s birthday. Known for his famous quote "I have never yet met a man that I didn't like," he was more than a funny cowboy. During the depths of the Great Depression, angered by Washington's inability to feed the people, Will Rogers embarked on a cross country fund raising tour for the Red Cross.

Tomorrow as you vote, you might want to keep some of his wit and wisdom in mind:

"Everything is changing. People are taking the comedians seriously and the politicians as a joke."

"Our foreign policy is an open book - a checkbook."

"Lettin' the cat out of the bag is a lot easier than puttin' it back in."

"People who fly into a rage always make a bad landing."

“Be thankful we're not getting all the government we're paying for.”

“Diplomacy is the art of saying 'Nice doggie' until you can find a rock.”

"Even if you are on the right track, you'll get run over if you just sit there."

Most of this stuff he said 75 years ago.


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