The SBA and assiduous

assiduous
(uh-SIJ-oo-uhs)
adjective: Constant; persistent; industrious.
From Latin assiduus, from assidere (to attend to, to sit down to), from ad- (toward) + sedere (to sit).
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TIP OF THE WEEK
Despite the assiduous efforts of many, the use of a 504 loan to refinance debt is still not yet available.

Currently a SBA 7(a) loan can be used to refinance real estate debt that has a balloon and it could also provide additional working capital if necessary.

Lenders and borrowers must be assiduous in their calculation of the SBA guarantee fee however. It’s back.

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Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2011 = 3.26%
SBA Fixed Base Rate January 2011 = 6.06%
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504 Debenture Rate for January
The debenture rate is 3.89% but note rate is 3.951% and effective yield is only 5.951%.
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AHEAD OF THE YIELD CURVE

Be assiduous in reading the tea leaves of the yield curve.

The yield curve is now very steep.

The difference between yields on U.S. 2- and 30-year securities has reached almost 4 percentage points. This is the steepest slope to the yield curve since at least 1977

Does this mean interest rates will soon rise?

Not necessarily.

Lost on the Friday of a three day weekend was the Federal Reserve’s release on capacity utilization.
Here is what capacity utilization rates have done:
1997- 83.6
1998- 83.0
1999- 82.4
2000- 82.6
2001- 77.4
2002- 75.6
2003- 74.6
2004- 79.2
2005- 80.7
2006- 82.4
2007- 81.5
2008- 79.9
2009- 69.9
2010- 74.8
2011- 76

What does all this mean?
I don't know.

Capacity utilization, which measures the amount of a plant that is in use, increased to 76 percent last month, the highest since August 2008, the Fed’s production report showed. The gauge averaged 80 percent over the past 20 years, signaling there’s enough spare plant equipment and space to prevent bottlenecks that would push prices higher.

One of the Federal Reserve’s favorite gauges of the economy is the capacity utilization rate. The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher. Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

Capacity utilization at 76% is still far below normal - and well below the the pre-recession levels of 81.2% in November 2007.

That means we still have a long way to go before interest rates really start to go up.
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OFF BASE

Ok, let’s not be so assiduous that we forget to stop and smell the roses, catch the waves or watch the sunsets.

Thank goodness for yesterday’s holiday.

It was an official holiday because the Federal Reserve Board said it was.

Here are the holidays this year that will be observed by the Federal Reserve Board:

Birthday of Martin Luther King, Jr.- January 17

Washington's Birthday- February 21

Memorial Day- May 30

Independence Day- July 4 Monday

Labor Day- September 3

Columbus Day- October 8 Saturday (bummer)

Veterans Day- November 12 Friday

Thanksgiving Day- November 22

Christmas Day- December 25


Notice the long stretch of no holidays from Washington’s Birthday to Memorial Day?

It looks like we need another holiday wedged in there and Opening Day for Major League Baseball in the perfect candidate.

Only 71 days until the season starts.