Monday, August 29, 2016

The SBA and estivate

To pass the summer in a dormant state.
From Latin aestivare (to spend the summer).

SBA did not estivate over the summer. 

There was a substantial change to guidance on affiliation and franchises.  Formerly SBA required review of all franchise agreements of all franchises owned by the franchisee, not just the applicant agreement.  That is no longer the case.

 SBA, along with other federal agencies, is currently developing a comprehensive approach to requests for consent to C-PACE financing on 504 and 7(a) project property.  Keep in mind that the $5,000,000 limitation for SBA financial assistance only applies on a per project basis for clean energy projects.  Borrowers can obtain additional financing even if they have $5,000,000 in existing SBA guarantees.

You also no doubt heard that SBA 504 loans can now be used for debt refinance.

SBA is also putting the finishing touches on another revision to its Standard Operating Procedures.

SBA LIBOR Base Rate August 2016 =3.49%
SBA Fixed Base Rate August 2016 = 4.75%
SBA 504 Loan Debenture Rate for August   
The debenture rate is only 2.04% but note rate is 2.077% and the effective yield is 4.093%.

The Federal Reserve has one more chance to estivate. 

Its next meeting on interest rates will end on September 21st, the last day of summer.

At its last meeting the Fed included this phrase in a statement released after the meeting: "Near-term risks to the economic outlook have diminished.”

Based on the FOMC statement, the likelihood of a rate hike in September (or November or December) has increased.  The first paragraph was about as upbeat as back in April when many analysts thought a rate hike in June was possible.  So now the key is the data.  In July, U.S. payrolls leaped for a second straight month as employers added 255,000 jobs.  Keep your eyes and ears open for the August report on jobs.  It comes out on the Friday of Labor Day weekend.   If the data is solid, the FOMC might raise rates in September.

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

July                                      255,000
June                                     292,000
May                                       11,000
April                                     123,000
March                                   186,000
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.

There has been a recrudescence in job growth, averaging 274,000 over the last two months and 186,000 per month this year.   

Impecunious concerns will motivate the Federal Reserve.  They don’t want to enervate the economy and create any splenetic presentiment.

A three weekend approaches!

Here are the officially recognized Federal Reserve holidays:
Labor Day September 5
Columbus Day October 10
Veterans Day November 11
Thanksgiving Day November 24
Christmas Day December 26 

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