Saturday, February 23, 2013

The SBA and discomfit

1. To confuse or embarrass.
2. To thwart the plans of.
From Old French desconfit (defeated), past participle of desconfire (to defeat), from des- (not) + confire (to make), from Latin facere (to make).


Sequestration should not discomfit SBA lenders or borrowers.
Unless Congress acts by March 1st, a series of automatic cuts—called sequestration —would reduce Small Business Administration loan guarantees to small businesses by up to $902 million.
SBA loans posted the second largest dollar volume ever in fiscal year 2012.  That amount was surpassed only by fiscal year 2011, which was heavily boosted by the loan incentives under the Small Business Jobs Act of 2010.  The totals for fiscal year 2012 included $15.15 billion SBA 7(a) loans. 
Based upon current loan volume to date, SBA does not anticipate any interruption to its loan guaranty programs.


SBA LIBOR Base Rate February 2013 = 3.20%
SBA Fixed Base Rate February 2013 = 4.77%

Debenture Rate for February
The debenture rate is 2.21% but note rate is 2.249% and effective yield is only 4.29%.


The economy is either picking up or slowing down.
The Federal Reserve recently indicated that the capacity utilization rate decreased in January to 79.1 percent.   But that’s only because the capacity utilization rate for December was revised up from 78.8% to 79.3%.  
It’s the revisions that are discomfiting.
Just two days after the Department of Commerce said that the U.S. economy shrank slightly in the last quarter of 2012, the Department of Labor announced that payrolls rose 157,000 following a revised 196,000 advance in December and a revised 247,000 surge in November.   Originally it had been estimated that payrolls rose by 155,000 workers in December following a revised 161,000 advance in November.
The Labor Department also issued its annual benchmark update, which aligned employment data spanning from April 2011 to March 2012 with corporate tax records. The revision showed payrolls grew by an additional 424,000 workers in that period.   Employment actually improved by almost ½ million people more than we thought.  
Now keep your eyes and ears open for the Commerce Department’s second revision to fourth quarter GDP.   They previously said that the economy contracted at an annual rate of 0.1 percent in the fourth quarter.  
The Fed for the first time in December linked the outlook for its main interest rate to unemployment and inflation targets. The central bank said the rate would stay close to zero “at least as long” as the jobless rate stays above 6.5 percent and inflation projections are for no more than 2.5 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:
DEC13- 0.39
DEC14- 0.64
DEC15- 1.08
DEC16- 1.76
DEC17- 2.46
DEC18- 2.99
DEC19- 3.325
What does all this mean?
I don’t know.
Interest rates should not discomfit anyone.

Our next three day weekend is not until Memorial Day.
That sure seems like a long ways off.
According to the Federal Reserve, here are the remaining holidays for 2013:

Memorial Day May 27
Independence Day July 4
Labor Day September 2
Columbus Day October 14
Veterans Day November 11
Thanksgiving Day November 28
Christmas Day December 25 
Obviously a holiday needs to be inserted somewhere between now and the end of May.   
One possible candidate could be Evacuation Day.  That’s when George Washington won his first victory in the Revolutionary War.  British General William Howe, surrounded by the colonials, decided to retreat, withdrawing from Boston to Nova Scotia on March 17, 1776.   This was a huge morale boost for the Thirteen Colonies, as the city where the rebellion began was the first to be liberated.   Drunken Irishmen, confusing the celebration over the liberation of Boston with Saint Patrick’s Day joined in causing the day to be celebrated with great fervor.
Opening Day for Major League Baseball also beckons as a potential holiday.  
Juan Pierre continues his quest to not be discomfited on the base paths.  Last season he stole 37 bases to pass Maury Wills on the all time stolen base list.    Maury Wills first stepped onto the field in Dodger blue on June 6, 1959 replacing a retiring Pee Wee Reese.   Having passed Maury Wills, Juan is now the current active career leader in stolen bases with 591.

Tuesday, February 12, 2013

SBA 504 Loan Debenture Rate

Debenture Rate for February

The debenture rate is 2.21% but note rate is 2.249% and effective yield is only 4.29%.

Monday, February 11, 2013

The SBA and dyspeptic



adjective: 1. Relating to or suffering from dyspepsia (indigestion).
                     2. Having a bad temper; gloomy; irritable.

noun: One suffering from dyspepsia.

Via Latin from Greek dys- (bad) + peptos (digested).



This should silence some of the dyspeptics.

Commercial real estate continues its recovery.

The CoStar Commercial Repeat Sale Indices (CCRSI), which looks at more than 100,000 repeat sales, offers the broadest measure of commercial real estate repeat sales activity.

According to CoStar, commercial real has made strong gains over the last year and is now up nearly 10% from its nadir in the first quarter of 2011.

If you would like a copy of the latest CoStar report, let me know.

SBA loans can provide financing with only 10% down for owner-user commercial real estate.



SBA LIBOR Base Rate February 2013 = 3.20%
SBA Fixed Base Rate January 2013 = 4.77%

Debenture Rate for January

The debenture rate is 2.13% but note rate is 2.168% and effective yield is only 4.212%.


A somewhat dyspeptic Federal Reserve argued that "economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors".

The other transitory factors? 

Government spending cuts and slower inventory growth, which can be volatile, subtracted a combined 2.6 percentage points from GDP.  The Commerce Department said that the economy contracted at an annual rate of 0.1 percent in the fourth quarter.  That was a sharp slowdown from the 3.1 percent growth rate in the July-September quarter.

For all of 2012, the economy expanded 2.2 percent, better than 2011's growth of 1.8 percent.

Keep your eyes and ears open for the Federal Reserve’s report on industrial production and capacity utilization.

Here is what capacity utilization rates have done:

1997- 83.6
1998- 83.0
1999- 82.4
2000- 82.6
2001- 77.4
2002- 75.6
2003- 74.6
2004- 79.2
2005- 80.7
2006- 82.4
2007- 81.5
2008- 79.9
2009- 67.3
2010- 74.8
2011- 76.7
2012- 79.0

What does all this mean?

I don't know.

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.

The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher.

Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

Last month’s Fed report showed that capacity utilization, which measures the amount of a plant that is in use, was little changed at 78.8 percent from 78.7 percent.

The cost of living was little changed in December, capping the smallest annual gain in the past decade (1.7%). The unchanged reading in the consumer price index followed a 0.3 percent decrease in November, according to Labor Department figures.

Interest rates will obviously be remaining low for a long, long time.


There is nothing to be dyspeptic about.

Pitchers and catchers report.  Spring beckons.   A three day weekend approaches!

The question that will be on everyone’s mind is of course if Juan Pierre will ever, ever again hit another home run.

He hit his very first home run off Jose Lima in 2000.  But every batter who ever faced Jose Lima hit a home run off him.

Since then, Juan has only hit 17 home runs in 7,950 plate appearances.  That’s 467 at bats per home run.  Babe Ruth by comparison went 11.76 at bats per home run.

Juan by far is the active major league leader in home run futility.  His distain for the long ball extends to the outfield.  Pierre robbed Barry Bonds of a career 714th home run, which would have tied Bonds with Babe Ruth, by catching the ball right before it topped the fence.

Tuesday, February 5, 2013

SBA 7(a) Rate Update


SBA LIBOR Base Rate February 2013 = 3.20%
SBA Fixed Base Rate February 2013 = 4.77%

Lenders can charge up to 2.75% over these indices.