Monday, October 26, 2015

The SBA and poppycock


From Dutch dialect pappekak (soft dung) or poppekak (doll’s excrement). Ultimately from the Indo-European root kakka-/kaka- (to defecate)


Some poppycock from the IRS:

There is a revised Form 4506-T, Request for Transcript of Tax Return, dated 09-2015 that is available for use on IRS.GOV.  There will be an adjustment period until December 7, 2015 to start using the revised form.  Starting December 7, 2015 the Sites will be rejecting requests that are not submitted on the revised form and if the attestation box above the signature line is not checked.

SBA LIBOR Base Rate October 2015 = 3.19%
SBA Fixed Base Rate October 2015 = 4.91%
SBA 504 Loan Debenture Rate for October

The debenture rate is only 2.72% but note rate is 2.76688% and the effective yield is 4.801%.   


More poppycock keeps coming out of Washington.

The Treasury Department said Thursday it would postpone an auction of two-year notes because of worries that the debt limit impasse in Congress would prevent the sale from going through.

The move is the latest warning from the Treasury Department that the looming Nov. 3 deadline for raising the $18.1 trillion debt ceiling is already having an adverse effect on the economy.  The five year and seven bond auctions will proceed.  If for some reason the 30 year Treasury bond auction were cancelled, interest rates could actually decline.  When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.  Over the past several weeks, demand for U.S. Treasuries has been strong, pulling yields to their lowest level in five months. 

Don’t believe all the poppycock about interest rates going up.

The Federal Reserve meets this week and Friday afternoon the market was pricing no real probability of a rate increase at that meeting.

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:

DEC15- 0.39
DEC16- 0.76
DEC17- 1.44
DEC18- 1.77
DEC19- 2.25
DEC20- 2.57

What does all this mean?

I don’t know.

Eurodollar futures currently imply a federal funds rate that really is not going to be moving up all that much any time soon.

This might be poppycock but every time the New York Mets have gone to the World Series, a recession soon follows. 
In October of 1969 the Mets went to the World Series.  A recession soon followed.   
In October of 1973 the Mets went to the World Series.  A recession soon followed.   
In October of 1986 the Mets once again went to the World Series.   The economy held its breath for as long as it could but when it finally had to gasp for air the stock market crashed. The stock market crash of 1987 was the largest one day stock market crash in history, larger than that of 1929.  The economy would soon slump into recession.
The economy recovered and the nation enjoyed the 1990 boom years.  The party ended when the Mets went to the World Series in 2000.  Soon after the 2000 World Series ended, the economy slid into recession.  That recession would end the longest economic expansion in United States history.   The second longest expansion had ended when the Mets had gone to the World Series in 1969. 
In 2006 the Mets dominated the National League winning more games than any other team.  The next year they assembled an even stronger team and appeared a certainty to be in the World Series.  They then suffered the greatest collapse in baseball history.  The economy also soon collapsed. 

The Mets are in the World Series starting Tuesday might.

Tuesday, October 6, 2015

SBA 7(a) Loan Rate Update


SBA LIBOR Base Rate October 2015 = 3.19%
SBA Fixed Base Rate October 2015 = 4.19%
Lenders can charge up to 2.75% over these indices.

Monday, October 5, 2015

The SBA and crapehanger


A gloomy person; a pessimist.

A crapehanger was one who hung up black bands of crape as a symbol of mourning. The word is from English crape, from Latin crispus (curled or wrinkled).


No crapehangers amongst SBA lenders.

Effective October 1, 2015, lender’s annual service fee for SBA 7(a) loans has been reduced to 0.473 percent.  That means 7(a) loans are slightly more profitable for lenders.
Lenders however as of October 1, 2015,can no longer use the sale of the guaranteed portion as a credit elsewhere justification.  SBA will only guarantee a 7(a) loan if the lender determines that the borrower is unable to obtain credit elsewhere.

For loans of $150,000 or less, both the annual service fee and the guarantee fee are ZERO.


SBA LIBOR Base Rate September 2015 = 3.20%
SBA Fixed Base Rate September 2015 = 5.09%
SBA 504 Loan Debenture Rate for September

The debenture rate is only 2.82% but note rate is 2.87% and the effective yield is 4.902%.   


Nobody could possibly still be a crapehanger over interest rates.

Especially after Friday’s report on jobs for September.

Employment growth slowed for the second straight month in September as employers added 142,000 jobs, weakening the case for the Federal Reserve to raise interest rates later this year.

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

September                          142,000
August                                 136,000
July                                       245,000
June                                      245.000
May                                       260,000
April                                     223,000
March                                      85,000
February                             266,000
January                               239,000
2014     3,116,000
2013     2,074,000
2012     2,193,000
2011      2,103,000
2010     1,022,000
2009     -5,052,000
2008     -3,617,000
2007    1,115,000
2006     2,071,000
2005     2,484,000
2004     2,019,000

What does all this mean?

I don’t know.

Traders pared bets on a 2015 hike and subsequent increases after the surprisingly weak labor data for September. The probability the futures market assigns for a boost at or before the Fed’s March meeting is now slightly better than a coin flip, at 53 percent, down from 66 percent Thursday.

The Federal Reserve meets October 28th and 29th.
Crapehangers rejoice!  A three day weekend approaches.
According to the Federal Reserve, here are our remaining holidays for 2015:

Columbus Day October 12
Veterans Day November 11
Thanksgiving Day November 26
Christmas Day December 25 

Columbus Day first became an official state holiday in Colorado in 1906, and became a federal holiday in the United States in 1937, though people have celebrated Columbus's voyage since the colonial period.