Sunday, April 8, 2012

The SBA and volte-face



A reversal in policy or opinion; about-face.

From French, from Italian voltafaccia, from voltare (to turn), from Vulgar Latin volvitare, frequentative of Latin volvere (to turn) + faccia (face).



SBA has once again changed it rules for eligible passive companies (real estate holding entities) and operating concerns. 

The last SOP (Standard Operating Procedures) restricted SBA lenders from utilizing an EPC-OC structure for mixed-purpose loans that included use of proceeds by the OC for purposes such as business acquisition, purchase of intangible assets or goodwill.

This volte-face once again allows the OC to utilize loan proceeds for "working capital and/or the purchase of other assets, including intangible assets," provided that the OC is a co-borrower with the EPC on the loan.

A completely new and improved SOP 50-10-5 E is expected soon from SBA.



SBA LIBOR Base Rate April 2012 = 3.24%
SBA Fixed Base Rate April 2012 = 5.02%


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%.



Unemployment continues to fall.  Or does it?

Last month unemployment fell to 8.2 percent, the lowest since January 2009, from 8.3 percent.

The jobless rate dropped as unemployed workers stopped looking for work and left the labor force.  They've given up.  In other words, a shrinking percentage of our country is looking for work or employed.

Only one president since World War II - - Ronald Reagan -- has been re-elected with a jobless rate above 6 percent. Reagan won a second term in 1984 with 7.2 percent unemployment in the month of the election, after the rate had fallen almost three percentage points in the previous 18 months.

In the last 24 months, 3.45 million jobs have been created.  That’s not even keeping up with population growth.  The United States has added 3 million people a year since the recession began four years ago.  We will add 30 million people in the next 10 years. 

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

March 120,000
February 240,000
January 243,000
December 203,000
November 157,000
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.

There are a total of 12.67 million Americans unemployed and 5.3 million have been unemployed for more than 6 months. These numbers are declining, but still very high.

Keep your eye on Thursday’s auction of 30 year Treasury bonds.

Last month, 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.  

Since then the yield curve has flattened a bit.

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.

Last month’s 120,000 increase in payrolls was the fewest in five months.

It would appear that interest rates will continue to remain low for some time.



If you need to do a volte-face with the whole Easter thing, you might want to consider what Ronald Reagan had to say about it:

Meaning no disrespect to the religious convictions of others, I still can't help wondering how we can explain away what to me is the greatest miracle of all and which is recorded in history. No one denies there was such a man, that he lived and that he was put to death by crucifixion. Where ... is the miracle I spoke of? Well consider this and let your imagination translate the story into our own time -- possibly to your own home town. A young man whose father is a carpenter grows up working in his father's shop. One day he puts down his tools and walks out of his father's shop. He starts preaching on street corners and in the nearby countryside, walking from place to place, preaching all the while, even though he is not an ordained minister. He never gets farther than an area perhaps 100 miles wide at the most. He does this for three years. Then he is arrested, tried and convicted. There is no court of appeal, so he is executed at age 33 along with two common thieves. Those in charge of his execution roll dice to see who gets his clothing -- the only possessions he has. His family cannot afford a burial place for him so he is interred in a borrowed tomb. End of story? No, this uneducated, property-less young man has, for 2,000 years, had a greater effect on the world than all the rulers, kings, emperors; all the conquerors, generals and admirals, all the scholars, scientists and philosophers who have ever lived -- all of them put together. How do we explain that -- unless He really was what He said He was?"

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