Monday, March 21, 2016

SBA 504 Debenture Rate

SBA 504 Loan Debenture Rate for March      

The debenture rate is only 2.500% but note rate is 2.54381% and the effective yield is 4.553%.

Monday, March 14, 2016

The SBA and recrudescence

A renewed activity after a period of dormancy.
From Latin recrudescere (to become raw again), from re- (again) + crudescere (to get worse), from crudus (raw).

When something that's bad comes back to haunt you, call it a recrudescence. It's not a word you'll hear often, but it's useful. As a bonus, it lets you say "crud" while sounding really smart.


A recrudescence of notices with deadlines has come out from the IRS and the SBA.

The original implementation date for the new IRS Form 4506-T with the attestation box was to be March 1, 2016.  The implementation date has been moved to March 28, 2016.
Versions of the Form 4506-T with a date other than 09-2015 will be rejected.  The attestation box must be checked.

Lenders and borrowers should make sure they are using the correct form.

SBA One use will become mandatory for GP loan submissions to the Loan Guaranty Processing Center by Delegated Lenders effective July 1, 2016 (non-delegated loans) and for non-Delegated Lenders beginning FY17 (October 1, 2016).

SBA LIBOR Base Rate March 2016 =3.44%
SBA Fixed Base Rate March 2016 = 4.89%
SBA 504 Loan Debenture Rate for February
The debenture rate is only 2.27% but note rate is 2.31% and the effective yield is 4.324%.

Federal Reserve recrudescence on monetary policy is causing some splenetic presentiment.

The $12 billion auction of 30 year Treasury bonds last week however saw strong demand with the yield ending at 2.72%.  The yield curve is staying flat.  The slope of the yield curve—the difference between the yields on short- and long-term maturity bonds—has achieved some notoriety as a simple forecaster of economic growth. The rule of thumb is that an inverted yield curve (short rates above long rates) indicates a recession in about a year.  More generally, a flat curve indicates weak growth and conversely, a steep curve indicates strong growth.

This comes after a strong jobs report for the month of February that saw 242,000 jobs being added.  Also encouraging is that job gains for December and January were revised up by a total 30,000.

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

February                             244,000
January                               172,000
2015     2,740,000
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.

Total employment is now 5.1 million above the previous peak.  Total employment is up 13.8 million from the employment recession low. 

Yet despite the robust recovery in jobs, economic growth remains sluggish.  How can that be? 

U.S. gross domestic product would have been about $3 trillion higher in real, inflation-adjusted terms in 2015 if productivity hadn’t slowed over the last decade. 

It’s a paradox that’s been puzzling economists for a while. How can U.S. productivity growth be slowing down at the same time that innovation in everything from smartphones to 3D printing seems to be speeding up?  But that doesn’t translate into more economic output.  From the early 1970s through 1995, productivity rose about 1½% per year. Between 1995 and 2003, that pace more than doubled to a rate that was comparable to its fast pace before 1973. Considerable evidence suggests this acceleration in the late 1990s reflects the production and use of information technology (IT).   Over the past decade, however, the exceptional pace of productivity growth has disappeared, returning to roughly its pre-1995 pace.  

You can’t deny that technological innovation has made Americans’ lives easier and more enjoyable in many ways, from calling up directions on Google Maps to trading cat videos on Facebook. 

For example, instead of really working, you are reading this email.

The Federal Reserve meets this week on March 15th and 16th

Doesn’t it seem like spring is coming early? 

It is and a recrudescence of global warming has nothing to do with it.

Remember our LEAP day just a few weeks ago?   It all happens because the number of days in a year isn’t even. A year lasts 365 days, 5 hours, 48 minutes, and 46 seconds.   That’s the actual length of time it takes for the Earth to complete one orbit around the Sun.   The Earth's elliptical orbit is changing its orientation relative to the Sun (it skews), which causes the Earth's axis to constantly point in a different direction.  Since the seasons are defined as beginning at strict 90-degree intervals, these positional changes affect the time Earth reaches each 90-degree location in its orbit around the Sun. 

As a result, spring is currently being reduced by approximately one minute per year and winter by about one-half minute per year. Summer is gaining the minute lost from spring, and autumn is gaining the half-minute lost from winter. Winter is the shortest astronomical season and its seasonal duration is continuing to decrease.

But the Earth spins a hair less than 365 ¼ times per year (365 days, 5 hours, 48 minutes, and 46 seconds) . Call it 365.2422 days.  If only the year were 11 minutes longer, or 365.25000 days, we could simply add one day every fourth year and take care of the fraction forever.

As a result, the calendar seems to think spring is coming earlier and earlier. 

While it's true that we've traditionally celebrated the beginning of spring on March 21, astronomers now say that the spring season starts earlier.  Unheard of? Not if you look at the statistics. In fact, did you know that during the 20th Century, March 21 was actually the exception rather than the rule?  The vernal equinox landed on March 21, only 36 out of 100 years. And from 1981 to 2102, Americans will celebrate the first day of spring no later than March 20.

And in 2016, it will start on March 19 for the entire United States.  To conclude? This will be the earliest spring since 1896!

Monday, March 7, 2016

SBA 7(a) Loan Rate Update


SBA LIBOR Base Rate March 2016 = 3.44%
SBA Fixed Base Rate March 2016 = 4.89%
Lenders can charge up to 2.75% over these indices.