Tuesday, January 31, 2012
SBA 7(a) Weekly Lending Update
For the week ending January 27, 2012, SBA approved $4,257,467,000 in SBA 7(a) loans. That's an increase of $254,393,000 from the prior week.
Monday, January 30, 2012
SBA Loan Basics- What is a small business?
To be eligible for SBA financial assistance, which is a fancy way of saying to get a SBA loan, your company has to be considered a small business. Remember, SBA means SMALL BUSINESS Administration.
SBA uses what they call a size standard.
Currently the SBA defines a small business as one which has net profit after taxes less than $5 million averaged over the last three years and a BUSINESS net worth less than $15 million.
SBA uses what they call a size standard.
Currently the SBA defines a small business as one which has net profit after taxes less than $5 million averaged over the last three years and a BUSINESS net worth less than $15 million.
Friday, January 27, 2012
SBA 7(a) Weekly Lending Update
SBA ended its first calender quarter with $3,443,723,000 in approvals for the SBA 7(a) loan program. If you annualized that pace, it would end up way off from the record setting $19,637,889,000 in SBA 7(a) loan approvals for the fiscal year ending 9/30/11.
Right now loan approvals are averaging about $191,873,000 a week. Last year it was well in excess of $300,000,000 per week.
That means funding is readily available for borrowers.
Right now loan approvals are averaging about $191,873,000 a week. Last year it was well in excess of $300,000,000 per week.
That means funding is readily available for borrowers.
Sunday, January 22, 2012
The SBA and nugacity
Nugacity
noo-GAS-i-tee
Triviality; futility
From Latin nugax (trifling), from nugari (to trifle).
_______________________________________________
TIP OF THE WEEK
Our oasis of nugacity looks at SBA loans for debt refinance.
A SBA 504 loan can be used to refinance debt as long as 85% of the loan proceeds from the debt being refinanced were originally used to purchase or build real estate.
A SBA 7(a) loan can also refinance real estate debt as well as business debt used for other purposes. It can be amortized for 25 years if at least 51% of the loan proceeds for the debt being refinanced were originally used for a real estate purpose. Debt refinance with a SBA 7(a) loan requires that the debt being refinanced has a balloon or there is a 10% improvement in cash flow.
Keep in mind that refinancing with a SBA 504 loan is for a limited time only.
______________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2011 = 3.30%
SBA Fixed Base Rate January 2011 = 5.00%
________________________________________
504 Debenture Rate for January
The debenture rate is 2.76% but note rate is 2.81% and effective yield is only 4.839%.
________________________________________________
AHEAD OF THE YIELD CURVE
The Federal Reserve Open Committee meets this week.
Federal Reserve officials will for the first time make public their own forecasts for the federal funds rate at their January 24 and 25 meeting, according to minutes from last month’s Federal Open Market Committee.
By releasing their forecasts, central bankers are likely to alter expectations for the timing of the first increase in their benchmark rate, which has been kept near zero since December 2008.
Last month, Fed Officials repeated their view that economic conditions would warrant "exceptionally low levels for the federal funds rate at least through mid-2013.”
So what happens after 2013?
Eurodollar futures settle at a three- month lending rate that has averaged about 22 basis points more than the Fed's target over the past 10 years.
Here is a summary of what the market expects for Eurodollar futures based upon the pit-traded prices at the Chicago Mercantile Exchange:
DEC12- 0.58
DEC13- 0.73
DEC14- 1.28
DEC15- 2.00
DEC16- 2.60
DEC17- 3.05
DEC18- 3.34
What does all this mean?
I don’t know.
__________________________________________
OFF BASE
Happy New Year!
Or as our Chinese friends would say “Kung Hei Fat Choi.” Loosely translated, it means “Congratulations and be prosperous.”
Today is the first day of the Chinese New Year. Why today? Chinese New Year falls on the second new moon after the winter solstice.
The Chinese New Year tradition is to reconcile, forget all grudges and sincerely wish peace and happiness for everyone.
Reconcile, forget all grudges and sincerely wish peace and happiness for everyone. Not a bad way to start the year. Or restart your year.
noo-GAS-i-tee
Triviality; futility
From Latin nugax (trifling), from nugari (to trifle).
_______________________________________________
TIP OF THE WEEK
Our oasis of nugacity looks at SBA loans for debt refinance.
A SBA 504 loan can be used to refinance debt as long as 85% of the loan proceeds from the debt being refinanced were originally used to purchase or build real estate.
A SBA 7(a) loan can also refinance real estate debt as well as business debt used for other purposes. It can be amortized for 25 years if at least 51% of the loan proceeds for the debt being refinanced were originally used for a real estate purpose. Debt refinance with a SBA 7(a) loan requires that the debt being refinanced has a balloon or there is a 10% improvement in cash flow.
Keep in mind that refinancing with a SBA 504 loan is for a limited time only.
______________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2011 = 3.30%
SBA Fixed Base Rate January 2011 = 5.00%
________________________________________
504 Debenture Rate for January
The debenture rate is 2.76% but note rate is 2.81% and effective yield is only 4.839%.
________________________________________________
AHEAD OF THE YIELD CURVE
The Federal Reserve Open Committee meets this week.
Federal Reserve officials will for the first time make public their own forecasts for the federal funds rate at their January 24 and 25 meeting, according to minutes from last month’s Federal Open Market Committee.
By releasing their forecasts, central bankers are likely to alter expectations for the timing of the first increase in their benchmark rate, which has been kept near zero since December 2008.
Last month, Fed Officials repeated their view that economic conditions would warrant "exceptionally low levels for the federal funds rate at least through mid-2013.”
So what happens after 2013?
Eurodollar futures settle at a three- month lending rate that has averaged about 22 basis points more than the Fed's target over the past 10 years.
Here is a summary of what the market expects for Eurodollar futures based upon the pit-traded prices at the Chicago Mercantile Exchange:
DEC12- 0.58
DEC13- 0.73
DEC14- 1.28
DEC15- 2.00
DEC16- 2.60
DEC17- 3.05
DEC18- 3.34
What does all this mean?
I don’t know.
__________________________________________
OFF BASE
Happy New Year!
Or as our Chinese friends would say “Kung Hei Fat Choi.” Loosely translated, it means “Congratulations and be prosperous.”
Today is the first day of the Chinese New Year. Why today? Chinese New Year falls on the second new moon after the winter solstice.
The Chinese New Year tradition is to reconcile, forget all grudges and sincerely wish peace and happiness for everyone.
Reconcile, forget all grudges and sincerely wish peace and happiness for everyone. Not a bad way to start the year. Or restart your year.
Tuesday, January 17, 2012
504 Debenture Rate for January
504 Debenture Rate for January
The debenture rate is 2.76% but note rate is 2.81% and effective yield is only 4.839%.
The debenture rate is 2.76% but note rate is 2.81% and effective yield is only 4.839%.
Monday, January 9, 2012
The SBA and sedulous
sedulous
SEJ-uh-luhs
Involving great care, effort, and persistence.
From Latin se (without) + dolus (trickery, guile).
_______________________________________________
TIP OF THE WEEK
Be sedulous in choosing your financing options.
SBA loans are readily available as Congress passed and the President signed an omnibus-spending bill that appropriates $918.7 million to the SBA for fiscal year 2012.
Both the 7(a) and 504 programs should receive sufficient funding for the balance of the fiscal year.
This gives the 7(a) program $17.5 billion in commitments for this fiscal year.
______________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2011 = 3.30%
SBA Fixed Base Rate January 2011 = 5.00%
________________________________________
504 Debenture Rate for December
The debenture rate is 2.87% but note rate is 2.918% and effective yield is only 4.95%.
________________________________________________
AHEAD OF THE YIELD CURVE
The 30-year Treasury bond yield finished 2011 at 2.89%, after starting the year at 4.5%.
This drop in yield is noteworthy.
That means the yield curve moved flatter. Long rates fell, and short rates stayed the same, because they can go no lower.
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.
A flat curve indicates weak growth, and conversely, a steep curve indicates strong growth.
According to the Federal Reserve Bank of Cleveland, projecting forward using past values of the treasury yield curve spread and GDP growth suggests that real GDP will grow at about a 0.7 percent rate over the next year.
That’s a slow down from last year.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the third quarter of 2011 according to the "third" estimate released by the Bureau of Economic Analysis just before Christmas.
This does not bode well for job growth next year.
Here is a summary of net monthly payroll employment and this week’s interesting little table of data:
December 200,000
November 100,000
October 112,000
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
2010
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)
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?
I don’t know.
In 2011, the economy added 1.64 million total non-farm jobs or just 137 thousand per month. This is a better pace of payroll job creation than in 2010, but the economy still has 6.0 million fewer payroll jobs than at the beginning of the 2007 recession. There are a total of 13.1 million Americans unemployed and 5.6 million have been unemployed for more than 6 months.
Interest rates will obviously have to remain low for a long time.
__________________________________________
OFF BASE
Did everybody get spoiled by all the time off for Christmas and New Year’s?
If the thought of a full work week is terrifying, don’t despair. Another three day weekend is just ahead.
Monday, January 16th is Martin Luther King’s Birthday. Actually his birthday is January 15th but thanks to the Uniform Monday Holidays Act, we recognize it on the 16th.
According to the Federal Reserve, here are the holidays for 2012:
Birthday of Martin Luther King, Jr. January 16
Washington's Birthday February 20
Memorial Day May 28
Independence Day July 4
Labor Day September 3
Columbus Day October 8
Veterans Day November 12
Thanksgiving Day November 22
Christmas Day December 25
Notice that long stretch of no holidays between Washington ’s Birthday and Memorial Day?
That’s ridiculous. We could neatly wedge in there as a holiday opening day for Major League Baseball. It’s only 86 days away.
SEJ-uh-luhs
Involving great care, effort, and persistence.
From Latin se (without) + dolus (trickery, guile).
_______________________________________________
TIP OF THE WEEK
Be sedulous in choosing your financing options.
SBA loans are readily available as Congress passed and the President signed an omnibus-spending bill that appropriates $918.7 million to the SBA for fiscal year 2012.
Both the 7(a) and 504 programs should receive sufficient funding for the balance of the fiscal year.
This gives the 7(a) program $17.5 billion in commitments for this fiscal year.
______________________________________
Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2011 = 3.30%
SBA Fixed Base Rate January 2011 = 5.00%
________________________________________
504 Debenture Rate for December
The debenture rate is 2.87% but note rate is 2.918% and effective yield is only 4.95%.
________________________________________________
AHEAD OF THE YIELD CURVE
The 30-year Treasury bond yield finished 2011 at 2.89%, after starting the year at 4.5%.
This drop in yield is noteworthy.
That means the yield curve moved flatter. Long rates fell, and short rates stayed the same, because they can go no lower.
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.
A flat curve indicates weak growth, and conversely, a steep curve indicates strong growth.
According to the Federal Reserve Bank of Cleveland, projecting forward using past values of the treasury yield curve spread and GDP growth suggests that real GDP will grow at about a 0.7 percent rate over the next year.
That’s a slow down from last year.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.8 percent in the third quarter of 2011 according to the "third" estimate released by the Bureau of Economic Analysis just before Christmas.
This does not bode well for job growth next year.
Here is a summary of net monthly payroll employment and this week’s interesting little table of data:
December 200,000
November 100,000
October 112,000
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
2010
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)
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?
I don’t know.
In 2011, the economy added 1.64 million total non-farm jobs or just 137 thousand per month. This is a better pace of payroll job creation than in 2010, but the economy still has 6.0 million fewer payroll jobs than at the beginning of the 2007 recession. There are a total of 13.1 million Americans unemployed and 5.6 million have been unemployed for more than 6 months.
Interest rates will obviously have to remain low for a long time.
__________________________________________
OFF BASE
Did everybody get spoiled by all the time off for Christmas and New Year’s?
If the thought of a full work week is terrifying, don’t despair. Another three day weekend is just ahead.
Monday, January 16th is Martin Luther King’s Birthday. Actually his birthday is January 15th but thanks to the Uniform Monday Holidays Act, we recognize it on the 16th.
According to the Federal Reserve, here are the holidays for 2012:
Birthday of Martin Luther King, Jr. January 16
Washington's Birthday February 20
Memorial Day May 28
Independence Day July 4
Labor Day September 3
Columbus Day October 8
Veterans Day November 12
Thanksgiving Day November 22
Christmas Day December 25
Notice that long stretch of no holidays between Washington ’s Birthday and Memorial Day?
That’s ridiculous. We could neatly wedge in there as a holiday opening day for Major League Baseball. It’s only 86 days away.
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