Monday, April 1, 2019

The SBA and PRO se

pro se
(pro say)
On one’s own behalf (i.e., representing oneself in a court, without a lawyer).
From Latin pro (for) + se (himself, herself, itself, themselves).


You may NOT want to go pro se as a 7(a) lender on assisting living facility loan requests.  Nursing homes and assisted living facilities are no longer eligible.  This is not an April Fool’s joke. This is a recent change to the rules.  It used to be that businesses that were licensed as nursing homes or assisted living facilities were eligible.  They have now added the additional qualifier that they must also provide healthcare and/or medical services.  This is now reflected in SOP 50-10-5(K) which is effective April 1, 2019.  SBA has indicated that facilities must provide medical services beyond mere assistance with Activities of Daily Living (ADLs).

The recently revised SBA form 159 seems to think that there are pro se loan applicants as it continues to assert that the SBA Lender must inform the Applicant in writing that the Applicant is not required to employ an Agent or representative (including the SBA Lender) to assist the Applicant with the SBA loan application.  Note that anyone receiving a referral fee even if PAID by the lender must now sign the form 159.




SBA 504 Loan Debenture Rate for March

For 20 year debentures, the debenture rate is only 3.20% but note rate is 3.25325% and the effective yield is 4.586%.

For 25 year debentures, the debenture rate is only 3.42% but note rate is 3.46% and the effective yield is 4.741%.


Pro se bond geeks are terrified that the yield curve has inverted and the economy is on the brink of recession.

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.

Here is how the yield curve has changed over the last month and this week’s interesting little table of data:
3M         -0.04
6M         -0.06
1Y          -0.13
2Y          -0.24
5Y          -0.27
10Y       -0.30
30Y       -0.25

What does all this mean?

I don’t know.

The Federal Reserve Bank of Cleveland in their monthly assessment of the yield curve and predicted GDP growth said that the flatter yield curve was reflected in reduced expectations of growth. Using past values of the spread and GDP growth suggests that real GDP will grow at about a 2.1 percent rate during the next year, just below the 2.2 percent rate for February and even with the 2.1 percent rate for January.

Using the yield curve to predict whether the economy will be in recession in the future, the Cleveland Fed estimates the expected chance of the economy being in a recession next March at 32.7 percent, up from February’s estimate of 29.7 percent and from January’s 26.5 percent. So while the yield curve predicts a moderate amount of growth for the year, it also suggests the probability of recession in the near future is nearly one-third.

Two weeks ago, the 10-year Treasury yield staged its biggest one-day decline following a Fed meeting since March 2017, amid rising expectations for the central bank to trim its benchmark fed-funds rate.

Last month, the 30-year bond yield is down 26.6 basis points. Both the 10 year and 30 year bonds are also set to notch their biggest monthly rally since Dec. 2018.

The long end of the yield curve as reflected in 30 year Treasury bond appear to be enervating any splenetic presentiment of a bigly recrudescence in interest rates.


Pro se brings to mind the quote about a lawyer presenting himself has a fool for a client.

Abraham Lincoln often gets credit for the line, but in 1814 clergyman Henry Kett’s collection of proverbs in The Flowers of Wit included, “I hesitate not to pronounce that every man who is his own lawyer has a fool for client.”

Whether or not he came up with that one on his own, Mr. Lincoln has some pretty good ones.  Especially appropriate for these days is ““Some legal rights are moral wrongs”.

Other Lincoln classics include:
“Whatever you are, be a good one.”
“Do I not destroy my enemies when I make them my friends?”
“When you reach the end of your rope, tie a knot and hang on.”

Noted Lincoln biographer Doris Kearns Goodwin has a new book out, “Leadership in Turbulent Times”.  I just finished it and recommend you put it on your summer reading list.