Monday, January 9, 2012

The SBA and sedulous



Involving great care, effort, and persistence.

From Latin se (without) + dolus (trickery, guile).


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.



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%.



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
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.

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.



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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