Monday, January 25, 2016

The SBA and on tenterhooks

On tenterhooks
in a state of suspense or agitation because of uncertainty about a future event

From tenter which is from Latin tÄ“nsus past participle of tendere meaning to stretch.  This where the word tense also came from.

Tenterhooks aren't directly connected with tents, nor are they the hooks used by butchers, as the common misspelling 'tenderhooks' might suggest. A tenter is a wooden frame, often in the form of a line of fencing, used to hang woollen or linen cloth to prevent it from shrinking as it dries. The tenterhooks are, not surprisingly, the hooks on the tenter used to hold the cloth in place.

Tenters are no longer everyday objects but a hundred years ago, in wool weaving areas like the North of England, they were a common sight on the land around the many woollen mills, called 'tenter-fields'. It is easy to see how the figurative expression 'on tenterhooks', with its meaning of painful tension, derived from the 'tenting' or stretching of fabric.

You might always be on tenterhooks with SBA loans as another revision of their standard operating procedures is on the way.  SOP 50-10-5(I) will reflect changes to guidance on affiliations and franchise eligibility.  In addition, guidance on the use of 504 loans for real estate debt refinance should be provided.
SBA LIBOR Base Rate January 2016 =3.42%
SBA Fixed Base Rate January 2016 = 5.36%
SBA 504 Loan Debenture Rate for January
The debenture rate is only 2.78% but note rate is 2.82869% and the effective yield is 4.831%.

Are you on tenterhooks because the Federal Reserve meets this week?

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:

FEB16- 0.63
DEC16- 0.93
DEC17- 1.34
DEC18- 1.69
DEC19- 1.99
DEC20- 2.25
DEC22- 2.41

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.

No need to be on tenterhooks over the Presidential election.  Turns out game 6 of the World Series is the same night as Election Day.

Pitchers and catchers report in 23 days.

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