Wednesday, March 28, 2012

SBA 7(a) Weekly Lending Update

SBA 7(a) loan approvals jumped up to $327,254,000 for the week ending March 23rd.

That brings the year to date total to $6,382,157,000.

Borrowers and lenders overall appear to be a little more active than they have been.

SBA 7(a) loan volume has historically been a leading economic indicator.

Sunday, March 25, 2012

The SBA and lucubrate



To work (such as study, write, discourse) laboriously or learnedly.

Here's a word that literally means "to burn the midnight oil".

It's derived from Latin lucubrare (to work by lamplight), from lucere (to shine).



Lucubrate over commercial real estate opportunities.

CoStar’s monthly National Composite Index of commercial real estate prices opened 2012 with a 1.5% increase.   The index is now 1.9% above the same period last year, reflecting the ongoing recovery in commercial real estate fundamentals.  Pricing for commercial real estate remains low relative to recent history. The National Composite Index ended January 2012 down 31.9% from its previous peak in August 2007.

If you would like a copy of CoStar’s March report, let me know.



SBA LIBOR Base Rate March 2012 = 3.24%
SBA Fixed Base Rate March 2012 = 4.88%


504 Debenture Rate for March

The debenture rate is 2.51% but note rate is 2.55% and effective yield is only 4.591%.

The effective yield for the temporary debt refinancing available with a 504 loan is 4.793%.



The yield curve has gotten steeper, noticeable steeper.

Long term rates began to jump after the Federal Reserve announced at their last monetary policy meeting on March 13 that the economy was doing better. 

Two days after the Fed announcement, a $13 billion auction of 30-year bonds was sold at a yield of 3.383 percent, the highest since August.   This was a jump of 23 basis points.  

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 steeper curve indicates stronger growth.

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
2011- 2.89
2012- 3.30

So what does this mean?

I don’t know.

The surge in longer term yields stalled on Friday.

Treasury 30-bond yields dropped below their 200-day moving average, indicating this month’s slump in bond prices and surge in yields may be drawing to a close.  The yields dropped as low as 3.2958 percent, less than Friday’s 200-day moving average of 3.3343 percent. 

The steeper slope of the yield curve is also not enough to significantly change projected future growth.

Projecting forward using past values of the yield spread and GDP growth, the Federal Reserve Bank of Cleveland thinks that real GDP will grow at about a 0.7 percent rate over the next year, equal to the past two months.

Thursday the Bureau of Economic Analysis will release their third and FINAL estimate for fourth quarter 2011 GDP.

Their first or “advance” estimate for fourth quarter GDP was an increase of an annual rate of 2.8%.   Their second and “preliminary” was then bumped up to 3%.

This was an improvement over the 1.8% third and “final” estimate for third quarter GDP.  GDP for the third quarter was initially put at 2.5%, with subsequent downward revisions to 2.0% and finally 1.8%. 

So rates obviously are going to go up, stay the same, or go down.



In the Spring a young man's fancy lightly turns to thoughts of love.

Now before you go and think that the poem Locksley Hall is some beautiful sonnet about love and birds chirping, maybe you ought to read the whole thing.    It turns out that the theme of the poem is the bitterness of unrequited love. The speaker first recalls the happy times at Locksley Hall with Amy, the woman he loved. But after Amy left him, he became extremely bitter and angry. He heaps curses on her and the man she chose. He ends the poem by hoping that a storm destroys Locksley Hall.

As unbalanced as that is, things are even weirder.  Turns out the woman he was obsessed with was his COUSIN.  

Perhaps our fancy ought to turn to the fact that Opening Day for Major League Baseball is in just over a week.

Tuesday, March 20, 2012

SBA 7(a) Weekly Lending Update

For the week ending March 16, 2012, SBA has approved $6,054,903,000 in SBA 7(a) loans.  That's just over half as much ($11,0303,635,000) for the same period last year.

$271,998,000 in loans were approved for the week.  The week before that, $232,418,000 in SBA 7(a) loans were approved.

Wednesday, March 14, 2012

504 Debenture Rate for March

504 Debenture Rate for March

The debenture rate is 2.51% but note rate is 2.55% and effective yield is only 4.591%. 

The effective yield for the temporary debt refinancing available with a 504 loan is 4.793%.

Saturday, March 10, 2012

The SBA and stenotopic



Able to adapt only to a small range of environmental conditions.

From Greek steno- (narrow, small) + topos (place). Opposite is eurytopic.



Are borrowers being stenotopic about SBA loans?

SBA 7(a) loan approval volume is down by over 50% from a year ago. 

SBA 7(a) loan demand has historically been a leading economic indicator.

Lenders are now aggressively seeking new SBA 7(a) loan opportunities.



SBA LIBOR Base Rate March 2012 = 3.24%
SBA Fixed Base Rate March 2012 = 4.88%


504 Debenture Rate for February   

The debenture rate is 2.63% but note rate is 2.68% and effective yield is only 4.711%. 

The effective yield for the temporary debt refinancing available with a 504 loan is 4.91%.



The Federal Reserve Open Market Committee meets this week and it is widely expected that they will once again state that they plan to maintain “exceptionally low levels for the federal funds rate at least through late 2014.”

So what happens after 2014?

Minutes from the last Fed meeting show that some six committee members (out of 17) "anticipated that the target rate would need to be increased to around 1½ to 2¾ percent at the end of 2014."  Moving out to 2015 and 2016, the target rate expectations for the committee were "in a range from 3¾ to 4½ percent”.

Then again they could very well revise their numbers.  

The Fed just last month revised their estimate of capacity utilization up from 78.1 percent to 78.6 percent for December.  They then said capacity utilization “fell” in January to 78.5 percent.  The capacity utilization rate, which measures how much plants and factories are being used, is one of the Federal Reserve’s favorite gauges of the economy.    Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

The Fed next reports Capacity Utilization figures on Friday.     

The Department of Labor also revised their job growth numbers.  The change in December payroll employment was revised up from +203,000 to +223,000, and January was revised up from +243,000 to +284,000.   Revisions added a total of 61,000 jobs to payrolls in December and January.  The February jobs number came in at 227,000. 

Not to be left out, the Department of Commerce also revised their fourth quarter estimate of economic growth up to 3 percent from 2.8 percent.  

So where then are interest rates going?

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- 0.52
DEC13- 0.76
DEC14- 1.20
DEC15- 1.87
DEC16- 2.46
DEC17- 2.96
DEC18- 3.33
DEC19- 3.50

What does all this mean?

I don’t know.

The bond market remains skeptical.  Over the past month, the yield curve has flattened somewhat, as short rates moved up while longer rates barely budged.   A flatter curve telegraphs weaker growth. 

Keep your eye on Wednesday’s $13 billion auction of 30 year Treasury bonds.

The government had a little trouble selling $16 billion of 30 year Treasury bonds last month.    The 30 year Treasury bond yield reached 3.23 percent, the most since October 31st.   The 30 year bond yield is now at 3.18 percent.

One obviously can’t be stenotopic.



Daylight saving time has begun.  By the way, it's daylight SAVING time, not SAVINGS time.  Remember we are saving daylight.  It's an adjective, as in labor saving device. 

How is daylight saved?  Most people are tied to the tyranny of a clock and use standard time instead of solar time for their schedules.  As the days get longer and longer drifting towards the summer solstice, most people fail to let the sun wake them.  So that daylight is "lost".  People could simply wake up earlier to take advantage of the sunlight, but this is evidently impractical because of the supposed inflexibility of clock based schedules.

So instead we have to spring forward and then fall back.  The alternative would of course be to throw out our clocks and watches and use sundials.

Someone who is totally disregarding time is Colorado Rockies pitcher Jamie Moyer.

Jamie is now 49 years old.  49 years old!  Only three pitchers have played at this age or older.  Satchel Paige (59, in a one-time special appearance), Jack Quinn (50) and Hoyt Wilhelm (49).  And Jamie has only 33 wins to go to make it to 300 wins.  He might be the last pitcher to do it for quite awhile.  The next closest active pitcher is Roy Halladay with 188 wins. 

On Wednesday, in the Rockies' spring training debut, Jamie threw two innings and allowed only one hit.  On Sunday, against the White Sox, Jamie started the game and lasted three innings giving up one run on three hits with two strike outs.   Not bad.

Now none of us have an excuse for being late getting out of bed.

Tuesday, March 6, 2012

SBA 7(a) Weekly Lending Update

SBA 7(a) loan approvals bumped up to $288,616,000 for the week ending March 2nd.

So far year to date, SBA has approved $5,550,487,000 in SBA 7(a) loans.

This 5 1/2 billion in SBA 7(a) loan approvals is quite a drop from the 10.7 billion for the same period a year ago.    

Monday, March 5, 2012

SBA 7(a) Rate Update



SBA LIBOR Base Rate March 2012 = 3.24%

SBA Fixed Base Rate March 2012 = 4.88%

Lenders can charge up to 2.75% over these rates.