Monday, November 9, 2015

The SBA and veteran


vet-er-uh n, ve-truh n

a person who has had long service or experience in an occupation, office, or the like:
-a person who has served in a military force, especially one who has fought in a war:
-experienced through long service or practice; having served for a long period:

of, pertaining to, or characteristic of veterans.

  From Latin veterānus mature, experienced, equivalent to veter- (stem of vetus) old


Loans to veterans saw an increase of 101 percent in dollar amount and 45 percent in number of loans over last year.

One of the reasons for the increase is that U.S. military veterans can now save up to $69,062.50 on the SBA 7(a) loan guarantee fee.

SBA Policy Notice5000-1319 declares that the SBA guarantee fee on SBA 7(a) loans is now reduced by 50% for small businesses that are 51% or more owned and controlled by a veteran.


SBA LIBOR Base Rate October 2015 = 3.19%
SBA Fixed Base Rate October 2015 = 4.19%

SBA 504 Loan Debenture Rate for October
The debenture rate is only 2.72% but note rate is 2.76% and the effective yield is 4.801%.

Veteran interest rate observers should have fun over the next month leading up to the next Federal Reserve meeting on interest rates.

On Friday, the Labor Department said that said the U.S. economy created 271,000 new jobs in October marking the largest monthly employment gains of the year.   Total employment is now 4.3 million above the previous peak and is also up 13.0 million from the employment recession low.

The jobs report sparked a sell off in the Treasury market as it was taken by investors as an indication that the Federal Reserve had sufficient reason to raise interest rates in its December meeting.

The yield on the 30-year Treasury bond gained 6.7 basis point to 3.079%.

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- 3.97
2015- 2.91

Wait a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. 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.

What does all this mean?

I don’t know.

Keep your eyes and ears open for this week’s auction of 30 year Treasury bonds.  At last month’s auction, there was strong demand as the bidding was tight with the high yield coming in 1/2 basis point below expectations at 2.914 percent.

The 30 year Treasury yield is at historic lows implying a lack of concern over escalating interest rates. 

The Federal Reserve will also have one more jobs report to digest before its meeting on December 15th and 16th

Veterans Day is November 11th and it is a Federal holiday.

According to the Federal Reserve, here is our remaining holidays for 2015:

Veterans Day November 11
Thanksgiving Day November 26
Christmas Day December 25 

So why is it on the 11th instead of a Monday?  Major hostilities of World War I were formally ended at the 11th hour of the 11th day of the 11th month of 1918, when the Armistice with Germany went into effect. It coincides with other holidays such as Armistice Day and Remembrance Day, which are celebrated in other parts of the world  

By the way, it is Veterans Day - a simple plural without a possessive apostrophe (Veteran's or Veterans').  The United States government has declared that the attributive (no apostrophe) rather than the possessive case is the official spelling.

To all our Veterans, THANK YOU.

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