Monday, November 28, 2011

The SBA and corrigible


Capable of being corrected.
From Latin corrigere (to correct).


SBA lending is definitely corrigible.

For 7(a) loans, the 90 percent guarantee and no guarantee fee are once again available. To qualify applicant must be involved in international trade and be located in an area adversely affected by NAFTA based upon job losses and unemployment rate.

A reimbursement of the 504 debenture fee is also available for those applicants located in areas adversely affected by NAFTA.


SBA LIBOR Base Rate November 2011 = 3.25%
SBA Fixed Base Rate November 2011 = 4.95%

504 Debenture Rate for November

The debenture rate is 2.76% but note rate is 2.807% and effective yield is only 4.94%.

For debt refinance with a 504 loan, the effective yield is 5.234%


Corrigible or incorrigible?

47 million people actually lost their jobs in the last twelve months.

That’s not a misprint. Job losses totaled 47 million people in the last twelve months. Fortunately 48.3 million people were also hired in the last twelve months. Doing the math, that means the economy created a net 1.3 million jobs.

Most people don’t understand how vast and complicated our economy is as it’s the net number that makes the headlines.

For example, September reflected “only” 158,000 new jobs. But in reality employers took on 4.25 million workers in September. Through the first ten months of 2011, the economy has added 1.256 million total non-farm jobs or just 125 thousand per month. This is a better pace of payroll job creation than last year, but the economy still has 6.47 million fewer payroll jobs than at the beginning of the 2007 recession.

Keep your eyes opened for Friday’s report on jobs.

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

October 80,000
September 158,000
August 104,000
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.

Don’t be misled by the headlines.

There were only 80,000 jobs added in October. 104,000 private sector jobs were added, and 24,000 government jobs lost. However the change in total employment was revised up for August and September. Gains in the prior two months were revised up by 102,000.

Must ado was made last week that the economy in the U.S. expanded less than previously estimated in the third quarter. Gross domestic product climbed at a 2 percent annual rate from July through September, down from a 2.5 percent prior estimate.

Inventories were a greater drag on the economy last quarter than first estimated. They were cut at an $8.5 billion annual rate, subtracting 1.6 percentage points from growth, compared with a 1.1 percent previous estimate. It was the first time stockpiles were trimmed since the last three months of 2009.

But that is actually good news! Fewer inventories put producers on track to ramp up output heading into the holiday season. Restocking should boost growth by another 0.8 percentage points in the fourth quarter

Be corrigible.


As if Black Friday wasn’t bad enough, today is Cyber Monday.

Millions of otherwise productive working Americans, fresh off a Thanksgiving weekend of window shopping, are returning to high-speed Internet connections at work Monday and buying what they liked. The term “Cyber Monday” was coined based on research showing that 78% of online retailers reported a significant increase in sales on the Monday after Thanksgiving in 2004. In 2006, online spending on Cyber Monday jumped 25% to $608 million, 21% to $733 million in 2007, and 15% to $846 million in 2008. In 2009, online spending increased 5 percent on Cyber Monday to $887 million and that more than half of dollars spent online at US Web sites originated from work computers (52.7 percent). Last year Cyber Monday topped the $1 billion mark.

The whole point of the season seems to have been missed.

In case you have not noticed, the days have been getting shorter and shorter. The sun will rise about a minute later tomorrow and set a minute earlier. In just 24 days, it will be the shortest day of the year, the winter solstice.

Centuries ago in some cultures, elaborate festivals were held on the winter solstice. Alarmed by the colder weather, shorter days with less and less sunlight, and long, dark nights, some were convinced that they had done some terrible wrong and as punishment, the sun was leaving the sky never to return. Large bonfires were lit with rituals held pleading to whatever god they believed in to make the sun return.

These solstice festivals evolved into Christmas as we now know it.

Jesus probably was not even born on December 25th. The reality is that it would have simply been far too cold for shepherds to be out with their sheep at night in Israel. Don’t forget that Mary and Joseph came to Bethlehem to register in a Roman census. Such censuses were not taken in winter, when temperatures often dropped below freezing and roads were in poor condition. Taking a census under such conditions would have been self-defeating.

Only 27 days until Christmas.

Tuesday, November 15, 2011

SBA 7(a) Rate Update



SBA LIBOR Base Rate November 2011 = 3.25%

SBA Fixed Base Rate November 2011 = 4.95%

Lenders charge up to 2.75% over these indices.

Tuesday, November 8, 2011

504 debenture rate

The November Effective Rate* for SBA 504 Loans is 4.94%

For Debt Refinance with a 504 loan it's 5.234%

*Effective rate includes SBA fee, central servicing agent fee, and a 5/8% CDC fee

Monday, November 7, 2011

The SBA and asperity



Harshness or roughness.

Via French from Latin asper (rough).


Asperity in commercial real estate is easing, at least according to Moody’s.

The Moody’s/REAL Commercial Property Price Indices (CPPI) measure the change in actual transaction prices for commercial real estate assets based on the repeat sales of the same assets at different points in time. The National — All Property Type Aggregate Index (CPPI) recorded a 2.4% increase in August, bringing it to 15.3% above the post-peak low recorded in April 2011.

The share of distressed transactions included within this month’s CPPI was 21.7%, down 5.9% from last month and the lowest level since January 2010. Prices for distressed transactions were down by 3.5% from the last month and are 6.9% above their post peak low set in August 2010. The reduced share of distressed transactions helped drive this month’s overall price increase.

If you would like a copy of the Moody’s October 2011 report, let me know.

A SBA loan is well suited for commercial real estate purchase or refinance.

The refinance provisions with a 504 loan expire in less than a year.



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

504 Debenture Rate for October

The debenture rate is 2.76% but note rate is 2.807% and effective yield is only 4.609%.



In case you missed it, the economy has now recovered from the great recession.

According to the Department of Commerce, the value of goods and services produced in the U.S. last quarter surpassed its pre-recession level after 15 quarters, taking three times longer than the average for 10 previous recoveries since World War II.

Gross domestic product expanded at a 2.5 percent annual rate in the period from July through September, the fastest pace in a year and up from 1.3 percent in the prior three-month period. After adjusting for inflation, GDP climbed to $13.35 trillion last quarter, topping the $13.33 trillion peak reached in the last three months of 2007.

Left behind however are the ones who lost their jobs.

The number of Americans with jobs last month, 131.3 million, was lower than the 138 million workers in December 2007, when the 18-month recession began.

Only 80,000 jobs were created in October. Through the first ten months of 2011, the economy has added 1.256 million total non-farm jobs or just 125 thousand per month. This is a better pace of payroll job creation than last year, but the economy still has 6 ½ million fewer payroll jobs than at the beginning of the 2007 recession. There are a total of 13.9 million Americans unemployed and 5.9 million have been unemployed for more than 6 months.

So what does the bond market think about all of this?

Keep your eyes on Thursday’s $16 billion auction of 30 year Treasury bonds.

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.

Yields on 30 year bonds have fallen from this year’s high of 4.79 percent on February 9 down to about only 3.04 percent.

The slope of the yield curve—the difference between the yields on short- and long-term maturity bonds—has achieved some notoriety as a simple forecaster of economic growth. The rule of thumb is that an inverted yield curve (short rates above long rates) indicates a recession in about a year, and yield curve inversions have foreshadowed each of the last seven recessions. One of the recessions predicted by the yield curve was the most recent one. The yield curve inverted in August 2006, a bit more than a year before the current recession started in December 2007.

According to the Federal Reserve Bank of Cleveland, projecting forward using past values of the yield curve spread and GDP growth suggests that real GDP will grow at about a 0.8 percent rate over the next year

Asperity continues and interest rates will remain low.



The sun came up nice and early this morning.

That’s because Daylight Saving Time just ended.

The official spelling is Daylight Saving Time, not Daylight SavingS Time.

Saving is used here as a verbal adjective (a participle). It modifies time and tells us more about its nature; namely, that it is characterized by the activity of saving daylight. It is a saving daylight kind of time. Because of this, it would be more accurate to refer to DST as daylight-saving time. Saving is used in the same way as saving a ball game, rather than as a savings account.

So NO S for Daylight Saving Time and NO apostrophe for Veterans Day which is this Friday.

The holiday is commonly printed as Veteran's Day or Veterans' Day in calendars and advertisements. While these spellings are grammatically acceptable, the United States government has declared that the attributive (no apostrophe) rather than the possessive case is the official spelling.

Because it is a federal holiday, many American people have the day off from school or work for Veterans Day. Non-essential federal government offices are closed. Banks are closed and no mail is delivered. The holiday is often celebrated by having a ravioli meal. This tradition dates back to the ending days of World War I when President Woodrow Wilson, aware that the returning soldiers would be longing for home cooked meals, invited 2,000 soldiers to the White House and helped his staff chefs cook them ravioli, which had just become a mainstay in mainstream American kitchens due to commercial canning. In his Armistice Day address to Congress, Wilson was sensitive to the psychological toll of the lean War years. "Hunger," he remarked, "breeds madness."