Monday, January 27, 2014

The SBA and smellfungus

smellfungus
smel-FUNG-uhs
A habitual faultfinder or complainer.

After Smelfungus, a hypercritical character in Laurence Sterne's 1768 novel, A Sentimental Journey through France and Italy.

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TIP OF THE WEEK 

NO BODY should be a smellfungus about SBA loans.

To improve customer service and reduce processing times, the 7(a) Loan Guaranty Processing Center (LGPC) is further refining the loan guaranty submission process.  SBA Procedural Notice 5000-1304 requires all lenders to submit applications to the LGPC using the 10-Tab format for all loan guaranty requests beginning March 1, 2014.

The LGPC Submission Checklist has been updated to reflect the NEW submission forms and additional documentation now required.

Borrowers now have only TWO forms they need to sign and date (three if you count IRS form 4506 but now prior to submission of the application to the LGPC lender must obtain verification of the tax returns).
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Indices:
PRIME RATE= 3.25%
SBA LIBOR Base Rate January 2014 = 3.17%
SBA Fixed Base Rate January 2014 = 5.59%
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SBA 504 Loan Debenture Rate for January  

The debenture rate is only 3.46% but note rate is 3.516% and the effective yield is 5.541%
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AHEAD OF THE YIELD CURVE 
The Federal Reserve meets this week.

At its last meeting on monetary policy, the Federal Open Market Committee strengthened its commitment to keep the fed funds rate low, stating that a rise in the target rate would not come until the unemployment rate was “well past” the current threshold of 6.5 percent.   

With the unemployment rate now down to 6.7 percent, does that mean interest rates could possibly be heading up?  Minutes from the last FOMC meeting revealed that a few members suggested lowering the unemployment threshold to 6 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:

DEC14- 0.40
DEC15- 1.06
DEC16- 2.16
DEC17- 3.11
DEC18- 3.78
DEC19- 4.23
DEC20- 4.50

What does all this mean?

I don’t know.

Traders are betting the Federal Reserve won’t raise interest rates any time soon.

No body has to be a smellfungus about variable interest rates.

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OFF BASE
For some strange reason Super Bowl Monday is not a national holiday.

It might have to be as the game might even have to be played on Monday.

If the idea of Super Bowl XLVIII being played a day later than Sunday, Feb. 2 seems preposterous, it could happen if a massive snow storm is forecasted for northern New Jersey that weekend.  NFL officials on Wednesday conceded that contingency plans call for the championship game to be played at any point between Friday, Jan. 31 and Monday, Feb. 3 at MetLife Stadium.


I don’t want to be a smellfungus about this but after Washington’s Birthday we don’t have another holiday again until Memorial Day.

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