Monday, March 24, 2014

The SBA and nimiety



Excess or redundancy.

From Latin nimius (too much)


The perceived nimiety of SBA rules and regulations is improving.

 The elimination of the Personal Resource Test will be effective, April 21, 2014.  Business owners no longer need to pass a personal resource test that could restrict high-net worth owners from participating in SBA loan programs.

With the definition of a small business now at net profits less than $5,000,000 and a SBA loan size up to $5,000,000, more borrowers are eligible for more financing!


SBA LIBOR Base Rate March 2014 = 3.16%
SBA Fixed Base Rate March 2014 = 5.31%

SBA 504 Loan Debenture Rate for March  
The debenture rate is only 3.21% but note rate is 3.26% and the effective yield is 5.289%.

A nimiety of proclamations emanated from the Federal Reserve last week at their meeting on monetary policy.

The key sentence in the announcement was: "The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."

Near mandate consistent levels?  What does that mean?  The Federal Reserve has a statutory mandate, which by law means it is supposed to foster maximum employment and price stability.  Starting in December 2012, the FOMC said the federal funds rate would stay low at least as long as unemployment was higher than 6.5 percent and the outlook for inflation didn’t exceed 2.5 percent.  With the jobless rate at 6.7 percent last month, that guidance was fast becoming obsolete and the Fed has now dropped any specific reference to the unemployment rate.

So how about inflation?  The central bank’s preferred gauge of consumer prices climbed 1.2 percent in the year through February and hasn’t exceeded its 2 percent goal since March 2012.

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- 0.35
DEC15- 1.16
DEC16- 2.29
DEC17- 3.12
DEC18- 3.70
DEC19- 4.12
DEC20- 4.42

What does all this mean?

I don’t know.

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

There is no nimiety of Federal holidays.
According to the Federal Reserve, here are our remaining holidays for 2014:
Memorial Day May 26
Independence Day July 4
Labor Day September 1
Columbus Day October 13
Veterans Day November 11
Thanksgiving Day November 27
Christmas Day December 25 

Obviously another holiday needs to be inserted somewhere.

One possible candidate could be Opening Day for Major League Baseball which is next week (the Dodgers in Australia don’t count).  Of course that would take all the fun out of playing hooky.  

By the way, playing hooky apparently developed from the colloquial phrase "hooky-crooky" common in the early 19th century, which meant "dishonest or underhanded." The connection between the two phrases becomes clearer when we recall that to "play hooky" properly, one had to pretend to go to school.  Hooky-crooky," came from "by hook or by crook," meaning "by any means or tactic, fair or foul." Although this phrase first occurs in print way back in 1380 and is still common today, no one is sure of what the hook and crook were. One theory is that while tenants on English manors were not allowed to cut trees for firewood, the lord of the manor permitted them to have all the branches they could pull down with a shepherd's crook or a curved knife on a pole called a "hook."

Enough of this nimiety.

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