Monday, October 20, 2014

The SBA and Bailiwick



A person's area of expertise or interest.

From Middle English bailliwik, from bailie (bailiff), from bail (custody), from Latin baiulare (to serve as porter) + Middle English wick (dairy farm or village), from Old English wic (house or village), from Latin vicus (neighborhood).


SBA loans are of course our bailiwick.

The SBA ended its fiscal year on an exceptionally strong note with SBA 7(a) loan approvals increasing by over 11% from last year’s totals.

Fortunately a continuing resolution provided a $1 billion increase in the SBA's lending authority for both fiscal 2014 which just ended and fiscal year 2015 which has just begun.

The government’s fiscal year began October 1st.

SBA loan fees remain at ZERO for loans of $150,000 and less.

SBA LIBOR Base Rate October 2014 = 3.15%
SBA Fixed Base Rate October 2014 = 5.35%

SBA 504 Loan Debenture Rate for October
The debenture rate is only 2.740% but note rate is 2.787% and the effective yield is 4.15%.

The Federal Reserve’s bailiwick is supposedly monetary policy with a dual mandate to control inflation while making sure everyone can get a job.

Now they are getting concerned about inflation.  More precisely, they are concerned about NO inflation.

The Federal Open Market Committee is shifting its focus toward prices after putting its main emphasis on jobs for months. Several officials worried that “inflation might persist below” the committee’s target for “quite some time,” minutes from the Sept. 16-17 meeting said.

Longer-run inflation expectations have clearly eroded in the financial markets.

At the most recent auction of 30 year Treasury bonds, 30 year yields reached the lowest since May 2013.  The 30-year bonds yielded 3.074 percent at auction.

Here is what the 30 year Treasury bond has been doing and this week’s interesting little table:
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- 2.77
2013- 3.25
2014- 3.074

The 30 year Treasury bond is currently at 2.97 percent.

What does all this mean?

I don’t know.

Traders are betting the Federal Reserve won’t raise interest rates any time soon.
Did you ever wonder why the US government’s fiscal year begins on October 1st.   Jose Lima’s birthday is September 30th, but that has nothing to do with it.

The Federal fiscal year gives elected Congressmen, who begin office in January, time to participate in the budget process for the next fiscal year. The President kicks off the process when he submits the budget for the next year by the first Monday in February. Congress, including the newly elected officials, has until September 30 submit their own budgets and negotiate final budget to submit back to the President. If Congress doesn't meet the deadline, then some non-essential government agencies may start to shut down as we found out last year.

It wasn’t always that way.  

The first fiscal year for the U.S. Government started Jan. 1, 1789. Congress changed the beginning of the fiscal year from Jan. 1 to Jul. 1 in 1842, and finally from Jul. 1 to Oct. 1 in 1977 where it remains today.

The word "fiscal" was originally a Latin word meaning "a small rush basket," used as a purse. This became the "public purse," which became the French word fiscal, meaning "to tax."

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