Tuesday, October 11, 2011

The SBA and columbarium


1. A vault with niches for storing urns.
2. A dovecote or pigeon house.
From Latin columbarium, from columba (pigeon, dove).



A commercial columbarium or dovecote is used for pigeons in the production of squab. Squab has been commercially raised in North America since the early 1900s. Usually considered a delicacy, squab is tender, moist and richer in taste than many commonly-consumed poultry meats and is very lean, easily digestible, and rich in proteins, minerals, and vitamins. Squab grace the menus of American haute cuisine restaurants such as The French Laundry and has enjoyed endorsements from some celebrity chefs.

Unique properties such as a columbarium are eligible for SBA financial assistance for purchase, construction or debt refinance.


SBA LIBOR Base Rate October 2011 = 3.24%
SBA Fixed Base Rate October 2011 = 4.848%

504 Debenture Rate for September

The debenture rate is 2.85% but note rate is 2.89% and effective yield is only 4.709%.


It turns out the dog days of summer really didn’t go to the dogs.

Last month the Labor Department had reported that ZERO jobs were created in the month of August. Making matters worse, the government had also revised down job growth figures for July, to 85,000 from 117,000 and said employers added just 20,000 jobs in June, not 46,000.

September’s payroll numbers just came out and it now reports that the month of August payroll numbers have been revised up to 57,000. From ZERO to 57,000. July has been revised one more time to 127,000. These revisions to previous reports added a total of 99,000 jobs to payrolls in July and August.

September’s payrolls rose by 103,000.

Here is a summary of net monthly payroll employment and this week’s interesting little table of data:

September 103,000
August 57,000
July 127,000
June 20,000
May 25,000
April 232,000
March 194,000
February 235,000
January 68,000
December 121,000
November 93,000
October 210,000
September (41,000)
August (1,000)
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?

I don’t know.

Thirty-year bond yields dropped 20 basis points on September 2nd, when the government reported zero job growth in August. Yields had increased 18 basis points on August 5th, when the payrolls report showed the job market had gained traction.

Keep your eyes on Thursday’s $13 billion auction of 30 year Treasury bonds.

Yields on 30-year bonds decreased 146 basis points in the third quarter, the most since falling 164 basis points in the last three months of December 2008. The biggest bond rally in three years has repudiated Standard & Poor’s downgrade of our government’s AAA credit rating. These rates should continue to remain low as the Federal Reserve just purchased $2.5 billion of longer-term debt through its Operation Twist.

Even as the yield curve flattens, it has not inverted. Projecting forward using past values of the yield curve spread and GDP growth, the Reserve Bank of Cleveland suggests that real GDP will grow at about a 0.8 percent rate over the next year. It is quite optimistic about the recovery continuing.


If you didn’t notice, yesterday banks were closed in observance of Columbus Day, which is tomorrow.

On October 12, 1492 Columbus landed in the New World. Celebrations of the event, most notably starting in 1869 by Italians in San Francisco, become official in 1937 when President Franklin Roosevelt proclaimed every October 12 as Columbus Day. That's where it remained until 1971 when Congress declared it a federal public holiday on the second Monday in October.

The amazing thing about Columbus and his voyage was how it was financed. Many people think the King and Queen of Spain, Ferdinand and Isabella, bankrolled it. Not quite. Ferdinand and Isabella made the city of Palos pay back a debt to the crown by providing Columbus with two of the ships. The balance came from some Italian investors Columbus had lined up. The crown had to put up very little money from the treasury.

SBA lending works pretty much the same way. Our treasury department puts up very little money as fees collected by the Small Business Administration ends up subsidizing the program. Factor in taxes paid by successful borrowers and this ends up being a net revenue generator for us all.

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